Income statements

• What is an income statement?

  A financial document showing trading activities
• What does an income statement show?

  Revenue generated and costs incurred
• How does an income statement calculate profit or loss?

  By subtracting costs from revenue
• What is another name for an income statement?

  Profit & Loss Statement
• What does revenue refer to in an income statement?

  Income generated by sales
• What are costs of sales?

  Costs directly associated with goods' manufacture
• How is gross profit calculated?

  Revenue minus cost of sales
• What is operating profit?

  Gross profit minus other expenses
• What are one-off items?

  Non-recurring special or rare events
• What are other expenses in an income statement?

  Costs not directly associated with products
• What is taxation in the context of an income statement?

  Corporation tax on a firm's profits
• What is profit for the year?

  Profit after paying corporation tax
• How is profit before tax calculated?

  Operating profit plus finance income minus finance costs
• What are finance costs?

  Interest paid on loans
• What is finance income?

  Interest received on bank accounts