Unit 2.2 Flashcards
What does income states do?
They calculate the profit made from buying and selling
(Gross profit)
It also shows the profit made after expenses are paid.
(Net profit)
What’s the definition of revenue (sales)?
The amount of money made from selling good or services
What is the the definition of cost of sales?
The amount of money spent on sell it goods ( opening inventory and purchases) - closing inventory
What is the definition of gross profit
The profit made from buying and selling revenue - costs of sales
What’s the definition of expenses?
Running costs incurred throughout the year e.g rent, wages, utilities
What is if the definition of profit of the year ( net profit)
The profit made after the expenses are deducted from gross profit.
Gross profit = expenses
What did statement of financial position use to be known as?
It used to be known as the balance sheet
What does statement of financial position do?
Shows the items that the business owns (assets) the turns they owe ( liabilities) and the overall value of the business.
What is the definition of non current assess?
Items for w period of more than a year
Definition of current assets
Items owned a period of less than a year
Definition of current liabilities
Items owed for a period of time less than a year
Definition of working capital
The ability to pay short term debts (current assets - current liabilities)
What if the definition of total net assets
The overall value of the business (non current assets and working capital) - if working capital is negative it will be subtracted.
What is the definition of financed by?
This shows how the business had been financed e.g the capital, returned profits ect. It should ass up to the exact value of the total net assets
What did income statements use to be known as?
It use to be known as a trading, profit and loss account
