u3- income statement

Question 1

what does the income statement show

Answer 1

companies revenues, expenses and net income/ loss for the period

Question 2

what is gross profit vs. operating profit

Answer 2

gross profit= from buying and selling goods, not considering any other revenues or expenses (sales revenue- cost of sales)
operating profit= profit generated during period from the normal business activities (gross profit- operating expenses)

Question 3

what is profit for the peirod

Answer 3

profit attributable to the owners added to equity in balance sheet.

Question 4

what are retained profit/ earnings

Answer 4

profit not paid out as dividends but retained by the company to be reinvested in the core business or pay debt. recorded under shareholders equity on balance sheet

Question 5

what are the causes of changes in equity

Answer 5

owner contributing resources to the business, owner withdrawing resources from the business or business generating profit/ loss which belongs to the owners