Chapter 2 - Interpreting Financial Results Flashcards
The effect of comprehensive income items on net profit
ITEMS :
SALES COS GP EXPENSES INCOME TAX
SALES
Most important source of income
- increase sales by:
Ensuring you have the best product possible
Set and keep up with trends that prevail in the market
Offering discount
COST OF SALES
The net purchase of goods that have been sold during a particular period
Methods to decrease COS
- negotiating discounts with suppliers
- minimizing shrinkage
- lowering transport costs & storage costs
- buying bulk to get a better purchase price
GROSS PROFIT
Difference between net sales &
COS
The profit from sales before deducting overheads, interest and tax
Operating expenses
Costs incurred by the business that cannot be turned back into cash eg stationery
NOT OPERATING EXPENSES
- COS
- Sales returns
- Taxation
- Interest on fixed deposit
Define interest
COST OF MONEY.
Accounted before calculating net profit
Define Dividend
THE DISTRIBUTION OF A PORTION OF PROFIT EARNED BY A COMPANY
RETURN TO INVESTORS CAN EITHER BE CAPITAL GROWTH IN SHARE PRICE OR DIVIDENDS
DEFINE SHRINKAGE
DEFINED AS THE LOSS OF GROSS PROFIT ATTRIBUTABLE TO THE FOLLOWING
THEFT AGEING BREAKAGES POOR STOCK ROTATION OBSOLETE INVENTORY LITERAL SHRINKAGE EG COMPOST NATURAL DISASTERS LIKE FIRE, STORMS
MINIMIZE SHRINKAGE BY
IMPROVING SECURITY CCTV
KEEPING ACCURATE STOCK MOVEMENT
PROVIDING ADEQUATE AND SECURE STORAGE
ENSURING CORRECT PRODUCTS AND QUANTITIES ARE SHIPPED
REDUCE SHOPLIFTING BY
PLACING EASY TO STEAL ITEMS IN VISIBLE AREAS
PLACING WARNING SIGNS
REDUCING SHOP CLUTTER
BE ATTENTIVE
TRAINING STAFF TO SPOT THEIVES
PROPER STOCK CONTROL MEASURES
LOG ALL ORDERS AND ASSIGN NUMBERS
CHECK IF SUPPLIER DELIVERED CORRECTLY
CHECK IF DELIVERY IS IN GOOD CONDITION
COMPARE INVOICE WITH PURCHASE ORDER
UNPACK GOODS AND CHECK FOR SHORTAGES TO REPORT TO MANAGEMENT
PERFORM VISUAL INSPECTION TO CHECK EXTERIOR DAMAGE
