What I may already know: • A business has many expenses. • Profit is when a business has money leftover after all expenses are paid. • Loss is when a business has spent more money than it has earned.
Learning Intentions
In this chapter, I will learn: • Why a business prepares income statement 2. • How to prepare income statement 2. • What is meant by bad debts. • How a business can check its customers’ credit status. • What depreciation is and how it is calculated. • How to combine income statements 1 and 2 into a single income statement.
Key Words: Income statement 2 Net profit Net loss
Expenses
Carriage outwards Bad debts
Credit status Depreciation
Net book value (NBV)
WHY DOES A BUSINESS PREPARE INCOME STATEMENT 2?
Income statement 2 shows a business’s total expenses for a trading period (usually a year) and the net profit or net loss that the business has made when these expenses have been deducted.
