Chapter 33, Income Statements

Question 1

Gross profit

Answer 1

revenue minus cots of sales

Question 2

Operating Profit

Answer 2

Gross profit minus expenses

Question 3

Profit for the year

Answer 3

Profit and dividends minus tax

Question 4

Contents of an Income Statement

Answer 4

• Revenue
• Costs of sales
• Gross profit
• Operating costs
• Profit before tax
• Profit for the year
• Non operating income/expenses

Question 5

Three sections of the income statement

Answer 5

• Trading account
• income statement
• appropriation account

Question 6

Uses of Income Statement

Answer 6

• helps with decision making
• allows comparisons to be made
• calculate ratios
• information for stakeholders