Chapter 2 - Interpreting Financial Results Flashcards Preview

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Flashcards in Chapter 2 - Interpreting Financial Results Deck (11):
1

The effect of comprehensive income items on net profit

ITEMS :

SALES
COS
GP
EXPENSES
INCOME TAX

2

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

3

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

4

GROSS PROFIT

Difference between net sales &
COS

The profit from sales before deducting overheads, interest and tax

5

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

6

Define interest

COST OF MONEY.

Accounted before calculating net profit

7

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

8

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

9

MINIMIZE SHRINKAGE BY

IMPROVING SECURITY CCTV

KEEPING ACCURATE STOCK MOVEMENT

PROVIDING ADEQUATE AND SECURE STORAGE

ENSURING CORRECT PRODUCTS AND QUANTITIES ARE SHIPPED


10

REDUCE SHOPLIFTING BY

PLACING EASY TO STEAL ITEMS IN VISIBLE AREAS

PLACING WARNING SIGNS

REDUCING SHOP CLUTTER

BE ATTENTIVE

TRAINING STAFF TO SPOT THEIVES

11

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