Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
25 Cards in this Set
- Front
- Back
- 3rd side (hint)
|
Income statement |
Presents a firms income & expenditure for the financial year |
|
|
|
Income |
Revenue the business makes |
|
|
|
Financial income |
Profits on non-current assets sales |
|
|
|
Revenue |
Total amount of sales within a financial year |
|
|
|
Profit |
Amount of money the business makes after costs are deducted |
|
|
|
Gross profit |
Revenue - cost of sales |
|
|
|
Operating profit |
Gross profit - (distribution & selling costs + admin costs) |
|
|
|
Net profit |
(Operating profit + pre tax profit) - finance expenses (tax) |
|
|
|
Pre tax profit |
(Operating profit + finance income) - finance expenses (interest payable) |
|
|
|
Cost of sales (definition) |
Cost of the goods that have been sold by the business |
|
|
|
Cost of sales (formula) |
(Operating profit + purchases) - closing inventories |
|
|
|
Discounts allowed |
Given to customers to settle their accounts early |
|
|
|
Discounts allowed (accounting treatment) |
Deduct discounts allowed from trade receivables, charge as expense on income statement |
|
|
|
Accruals |
Unpaid expenses that arise from past events |
E.g. rent not paid for 3 months |
|
|
Depreciation |
Charged as expense on income statement (reduced costs of NCA on SFP) |
|
|
|
Residual value |
How much an asset can be sold for |
|
|
|
Reducing balance |
Calculation of annual depreciation on reducing balance basis |
|
|
|
Straight line method |
Cost - residual value / useful economic life of an asset |
|
|
|
Doubtful debts |
Businesses not 100% sure debt will be paid |
Private healthcare not being paid since patient in a coma |
|
|
Purchase returns |
Goods are returned by purchasers |
Accounting treatment: deduct from purchased & from trade payables |
|
|
Expenses |
Costs of the business |
|
|
|
Costs of sales |
Costs incurred directly in buying the goods |
|
|
|
Admin expenses |
All other costs of running trading operations |
|
|
|
Distribution & selling costs |
Costs of selling & distribution goods sold |
E.g. transport, advertising |
|
|
Bad debts/ non payments |
Rush of trading on credit, leasing to customers being unable to pay |
Deducted from trade receivables & added to admin expenses in the income statement |
