Chapter#5A: Financial Statements Flashcards Preview

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Flashcards in Chapter#5A: Financial Statements Deck (5)
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1

What is the Purpose of the Income Statement?

To show how much income has been earned by the business during the time period.

2

What is Cost of Goods Sold?

it's calculated by adding the opening inventory and the net purchases and then subtracting the ending inventory

3

How are Net Purchases calculated?

By subtracting purchases, returns, allowances and purchase discount

4

What else is Gross Margin refereed as?

Gross Profit/Total Sales

5

How is the net income calculated?

By subtracting the total expenses directly related to the operation of the company from the gross margin