Income statement

Pepe-Pencils
Mind Map by Pepe-Pencils, updated more than 1 year ago
Pepe-Pencils
Created by Pepe-Pencils about 5 years ago
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Mind Map on Income statement, created by Pepe-Pencils on 11/26/2015.

Resource summary

Income statement
1 Keywords
1.1 HMRC
1.1.1 Her Majesty's Revenue & Customs. UK tax authority which collects taxes based on your income.
1.2 Dividends
1.2.1 Money paid regularly by the business to its shareholders out of its profits.
1.3 Shareholder
1.3.1 A person who owns shares within the business.
1.4 Financial Year
1.4.1 A statement of the business' financial position once a year.
1.5 Assets
1.5.1 Fixed assets are costs you cannot run your company without, eg. vehicles.
1.5.2 Current assets are the stock and the money in the bank that keep changing with every term.
1.6 Debtors
1.6.1 People or companies who owe you money.
1.7 Liabilities
1.7.1 Current liabilities is the money that must be paid back within a year.
1.7.2 Long term liabilities include loans that can be paid over a longer period.
1.8 Share capital
1.8.1 The part of the capital of a company that come from the issue of shares.
1.9 Retained Profits
1.9.1 Profit kept from the previous financial year
1.10 Working Capital
1.10.1 The figure that represents the amount of money the business has available to run the business everyday. If it is too low or negative, the business may not be able to pay their debts when they are due.
2 Reason for interest in financial statements
2.1 Share holders
2.1.1 Is the money they invested safe? Will a good dividend be paid?
2.2 Managers
2.2.1 Is the business being managed well? Is it expanding or contracting?
2.3 Employees
2.3.1 Are their jobs safe? Can a wage rise be afforded?
2.4 Suppliers
2.4.1 Has the business enough money to pay what it owes?
2.5 Customers
2.5.1 Is the business sound enough to ensure that it can meet orders?
2.6 HMRC
2.6.1 How much corporation tax is owed?
2.7 Competitors
2.7.1 Are we making more or less profit than our main competitors?
3 Profit and loss account
3.1
3.1.1 The top three lines are the trading account.
3.1.2 The lower section lists the expenses
3.1.3 Net profit = gross profit - expenses
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