Income Statement

Question 1

What are the terms used in an income statements?

Answer 1

• Sales revenue
• Cost of sales
• Gross profit
• Expenses
• Profit for the year

Question 2

What is the definition of sales revenue?

Answer 2

The amount of money made from selling goods or services.

Question 3

What is the definition of cost of sales?

Answer 3

The amount of money spent on selling goods.
This is calculated by:
(opening inventory + purchases) - closing inventory.

Question 4

What is the definition of gross profit?

Answer 4

The profit made from buying and selling.
This is calculated by:
sales revenue - cost of sales.

Question 5

What is the definition of expenses?

Answer 5

Running costs incurred throughout the year.

Question 6

What is the definition of profit for the year?

Answer 6

The profit made after expenses are deducted from gross profit.
This is calculated by:
gross profit - expenses.