Chapter#5A: Financial Statements Flashcards Preview

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Flashcards in Chapter#5A: Financial Statements Deck (5)
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What is the Purpose of the Income Statement?

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


What is Cost of Goods Sold?

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


How are Net Purchases calculated?

By subtracting purchases, returns, allowances and purchase discount


What else is Gross Margin refereed as?

Gross Profit/Total Sales


How is the net income calculated?

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