Income Statements Flashcards

Flashcards covering vocabulary related to income statements.

Final Accounts

Published accounts of an organization, available to stakeholders like managers, employees, shareholders, sponsors, financiers, and investors.

Management accounting

Financial accounts created by and used for internal and confidential purposes.

Profit and Loss Account

Also known as the income statement, it is a component of the final accounts.

Profit & Loss Account / Income Statement

A financial statement summarizing revenues, costs, and expenses during a specified period.

Sales Revenue (Sales Turnover)

The money an organization earns from selling goods and services.

Costs of Goods Sold (COGS)

The direct costs of production, such as the cost of raw materials, component parts, and direct labor.

Gross Profit

The difference between revenue and costs of goods sold (COGS).

Expenses

The business’s indirect costs of production, e.g. rent, management salaries, marketing campaigns, travel expenses, repairs and maintenance, insurance, and depreciation.

Net Profit Before Interest and Tax

Shows the value of a business’s profit (or loss) before deducting interest payments on loans and taxes on corporate profits.

Tax

The compulsory deduction paid to the government as a proportion of a business’s profit.

Net Profit After Interest and Tax

Shows the actual value of profit earned by the business after all costs have been accounted for.

Dividends

The payments from a business’s net profit after interest and tax paid to the shareholders (owners) of the business.

Retained Profit

Any funds left over from net profits (after interest and tax) that is not paid to shareholders is kept within the business for its own use. It is a vital internal source of finance