Income Statement

• There are 2 Parts:

  1. The Trading Account

  Compares the value of sales to the customer with the value of sales at cost prices. It calculates the Gross Profit.
• There are 2 Parts:

  2. The Income Statement

  
  

  Calculates the profit or loss made after all the firm's expenses have been deducted from the gross profit. This gives the Profit for the Year.
• Terms:

  Sales/Turnover - The revenue the business receives from selling goods and/or services to its customers.
• Terms:

  Cost of Sales - The cost of purchasing goods from a supplier or cash and carry.
• Terms:

  Gross Profit/Loss - Difference between sales revenue and the cost of sales.
• Terms:

  Expenses - All necessary expenses incurred by the organisation electricity, advertising etc.
• Terms:

  Profit for the Year - The money that the organisation has left once all expenses have been deducted from the Gross Profit.