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9 Cards in this Set
- Front
- Back
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INCOME STATEMENT |
It is a financial statement that shows how much income , expense , profit or loss a business has over a period of time |
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PURPOSE OF INCOME STATEMENT |
It measures the profitability of the business which is the profit or loss for the period that the business has been operating |
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FOR BUSINESS THAT TRADES IN GOODS , INCOME STATEMENT ONLY HAS ONE PORTION |
-Trading portion -Profit and loss portion |
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TRADING PORTION |
It calculates the amount of gross profit or loss obtained from sale of goods only |
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PROFIT AND LOSS PORTION |
It calculates the net profit obtained after adding all the other income and deducting all other expenses |
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FOR BUSINESS THAT PROVIDES SERVICES , INCOME STATEMENT ONLY HAS ONE PORTION |
-Profit and loss portion |
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GROSS PROFIT |
It is the amount of profit earned from sales of good only . It measures how well a trading Bunessan is able to sell its good to create profit (importance of GP) |
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PROFIT FOR THE YEAR |
It is the business' net profit after adding gross profit and other income and deducting other operating expenses It measures the ability of the business to continue its operations (Importance of POTP) |
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INCOME STATEMENT |
Name of business IS for the year ended XXXXXXX -------------------------------------------------- $ $ Sales revenue XXX Less : net sales revenue (XXX) Net sales revenue XXX Less: cost of sales (XXX) Gross profit XXXXX Add : Other income Discount received XX . XX ------- total income XXXXX Less : expenses Discount allowed XX Stationery XX Interest XX (XXXX) ----- -------- _______ Profit of the year XXXXX ---------- ----------
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