5.24-26: Income statements, statement of fin.position & analysis

What are the accounts of a business?

• Financial records of a firm's transactions

• Financial records of a firm's value

• Financial transactions of a business

• Legal document showing a business' equity

Can a profitable business run out of cash?

• Yes

• No

What is NOT a reason why profit is important to private sector businesses?

• Source of finance

• Reward for enterprise

• Indicator of success

• More profit = more cash

Is profit important for public sector businesses?

• Always

• Never

• It might be, depending on the case

Is profit the most important aim for social enterprises?

Remember: examples of social enterprises are Greenpeace, WWF and other NGOs

• It might be, depending on the case

• Never

• Always

What is the name of the financial statement that records the income of a business

and all costs incurred to earn that income?

Multiple answers possible

• Cash flow forecast

• Income statement

• Statement of financial position

• Profit and loss accounts

What stakeholders are likely to be interested in the income statements of a business?

Multiple answers possible

• Shareholders

• Managers

• Government

• Banks

When a manager is analysing their business' income statements, what might they compare

the results with in order to assess the performance of the business?

(Multiple answers possible)

• Interest being paid on loans

• Previous years' cash flow forecasts

• The Finance Department budget

• Competitors' statements

What are the main features of an income statement?

• Revenue, variable costs, gross profit, net profit and retained profit

• Revenue, total profit, tax and dividends

• Cash, total costs and wages

• Revenue, total costs, gross profit and retained profit

How does one calculate the revenue? (Multiple answers possible)

• Gross profit + variable costs

• Total costs - Gross profit

• Selling price x amount sold

• Selling price x cost per unit