Third 5 And 6 Flashcards
Of which two statements does the final accounts of a business consist?
The Profit and Loss Account and the Balance Sheet.
What is the Profit and Loss account?
A statement summarising the trading activities of a business over a period of time.
It contains all income earned and expenditure incurred in an accounting period.
Profit or loss is calculated by comparing the two.
What is the difference between the profit and Loss account and the Balance Sheet account?
The profit and Loss account is a period-end statement.
The balance sheet is a snapshot of the business (including capital owed to the owner) at any given moment.
What is the Gross profit?
How is Gross Profit percentage calculated?
The difference between the Sales and the Cost Of Sales.
Gross profit percentage = (GP/Sales)*100
What is the Mark Up?
How is Mark Up percentage calculated?
The percentage which is added to the cost of goods which are sold, in order to calculate the selling price.
Mark Up percentage= (GP/Cost of Sales)*100
What is the net profit?
The deduction of all expenses, including the cost of goods and depreciation, from sales revenue.
It represents the amount available to the owner for withdrawals or other uses.
It is the basis for calculating the owner’s tax liability.
