Test 4 Flashcards
3 Components Classfied Income Statement
Selling and Distribution
General and Administrative
Financial
SD GA F
What do IS AND BS DO
The Income Statement and Balance Sheet can be analyzed to assist in determining the performance, financial position and liquidity of a business for a period of time.
How is profit determined
The performance of a business is determined by its profitability by deducting income from expenses which is shown in the Income Statement.
What does A balance sheet do
The Balance Sheet assesses the financial position of a business. It shows what a business owns and what it owes indicating the financial strength of the owner’s capital investment.
Purpose of income statement
The income statement informs the reader about the ability of a business to generate a profit. In addition, it reveals the volume of sales, and the nature of the various types of expenses, depending upon how expense information is aggregated
Purpose of Balance Sheet
The purpose of the balance sheet is to inform the reader about the current status of the business as of the date listed on the balance sheet.
What is an Income Statment
An income statement is a financial report detailing the income and expenses for a period and the resultant profit or loss.
What is Classifed Income Statement
A classified income statement is a financial report showing income, expenses and profits for which there are subtotals of the various income and expense classifications
3 categories for trading usinees - classified income statement
Selling and Distribution Expenses - eg ads, wages, bad debts
General and Administrative Expenses eg - rent, telephone, electricity, rates and taxes
Financial eg mortage
Classified Income Statement Format
Income
Sales
Less Discount Allowed
Less COGS
lESS DISCOUNT RECEIVED
Gross Porfit
Add other income
Total Income
Less Expenses
SD
GA
F
ISLLLGATL
What is debtor and what is creditor?
Debtor Acc Rec
Creditor Acc Pay
