Financial Accounting: Income Statement, Statement of Financial Position, and Cash Flow Statement

Financial Accounting

Contents
QUESTION 1.................................................................................................................................................3
Income statement...................................................................................................................................3
Statement of financial position................................................................................................................4
QUESTION 2.................................................................................................................................................5
Question 2a.............................................................................................................................................5
Question 2b.............................................................................................................................................6
REFERENCES................................................................................................................................................8

QUESTION 1
Income statement
An income statement is a financial record or record that shows a firm's profits and costs for
a specified fiscal year term. The income statement is used by businesses to compute net income,
which is a crucial factor in tax planning. It displays profits or losses on the simplest level. All
revenues and earnings are included with us on the report, followed by damages and losses to
indicate the total. Income statements are also used by businessmen and senior executives to make
judgments on procedures, profitability, effectiveness against rivals, and potential outcomes. In
contrast, public corporations must file financial filings with the SEC, which include a net
income. Financial statements must be prepared on a regular or annualized basis by any
organisation, corporation, or corporation. Governing agencies, shareholders, and other
participants including the IRS and the businesses' registration are all required to receive annual
accounts from major corporations.
The statement of income, balance sheet, and cash flow statements, in addition to the net
income, give important information about a business’ financial. An income statement can
provide management with information on revenues, net earnings, and performance.
Income Statement of Aderonke Ltd For the year ending of 31 December 2020
Particulars Details (£) Amount (£)
Sales Revenue 164,000
Less: Cost of sales
Opening inventory 6000
Add: Purchases 100,000
Less: Closing inventory
Less goods taken out by
owner for personal use (4400
– 500)
(3900) (102100)