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5.3 Income Statements (2. Income Statements (Purpose (Used by managers to…
5.3 Income Statements
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2. Income Statements
Gross Profit
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- Doesn't take overhead costs/expenses into account
- This section is called the 'trading account'
Net Profit
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- Takes all overhead (fixed) costs e.g. rent, into account
Retained Profit
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- Shows the profit left after all payments have been deducted.
Purpose
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Shows profit/loss, NOT cashflow
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:pencil2: The financial records of a firm's transactions.
e.g. income statements, balance sheets
:pencil2: Document recording the income and all costs used to earn that income over a period of time (1 yr).
Depreciation
:pencil2: The fall in value of a fixed asset over time,