The Income Statement Flashcards
All 5 cards in this deck
What is an income statement?
A financial document showing a business's financial performance from its income and expenses over a period of time, usually 12 months.
What is cost of sales (cost of goods sold)?
The variable costs incurred as a direct result of making a product or providing a service, e.g. raw materials.
What is the formula for gross profit?
Gross profit = revenue − cost of sales (cost of goods sold).
What is the formula for net profit?
Net profit = gross profit − total expenses.
What are the steps to work out net profit from an income statement extract?
e.g. revenue £500, cost of goods sold £200, total expenses £150- Revenue − cost of goods sold = gross profit: £500 − £200 = £300
- Gross profit − total expenses = net profit: £300 − £150 = £150