Income Statement

Question 1

Income statement

Answer 1

An income statement shows the profit or loss made by a business over time and show the gross profit and net profit made by a company.

Question 2

Purpose of an income statement

Answer 2

Can show levels of success in selling products / services

Can calculate tax to be paid to the government

Show where expenses can be reduced

Question 3

What is gross profit

Answer 3

Gross Profit - the profit on buying and selling the inventory

Question 4

What is profit for the year

Answer 4

the final profit for the business before tax is deducted.

Question 5

Profit formula

Answer 5

Selling Price – Cost Price = Profit
OR
Total Revenue – Total Costs = Profit