Financial Statements Flashcards
(10 cards)
What is the income statement and statement of financial position?
Income statement - find gross profit and net profit for years trading.
Statement of financial position - show accurate value of the business on any given date.
What is gross profit?
Difference between the money the business makes from the sale of goods and cost of sales without expenses.
How to calculate gross profit?
Sales revenue - Cost of sales
What is the net profit?
True profit of the business for that year and takes into consideration all the expenses which have to be paid by the business. It is the amount of money remaining after the expenses have been out of the gross profit.
How to calculate net profit?
Gross profit - expenses
Non current and current assets (owns) of a business
Non current (long term) - premises, machinery and vehicles.
Current (short term) - cash, closing inventories
What are the equities? (Owed by the business to the owner)
Capital - money invested into the business by the owner.
Net profit and- money made by the business through trading and belongs to the owner.
Drawings - money taken out of the business by the owner for personal use.
Non current and current liabilities (owes) of a business
Non current - bank loans may be and mortgage.
Current - overdraft and trade payables.
How to calculate working capital?
Current assets - current liabilities
