Cost of sales, depreciation and disposal of non-current assets

MN10668 lec 4

Warm up




Cost of sales, depreciation and disposal of non-current assets

Income statements
- Provides a summary of the results of a business’s trading activities during a given
accounting year
- Shows profit and loss for the year
- Enables users to evaluate financial performance


Structure of income statement

, Statement of financial position
- a list of assets, liabilities, and capital of a business at the end of a given accounting year
- provides info about the resources and debts of the reporting entity
- enables users to evaluate its financial position, in particular whether the business is likely
to be unable to pay its debts

Structure of SOFP




Purpose of trading accounts
- The first stage in determining the profit for the year involves calculating the gross
profit
- Usually carried out in the income statement
- This part of the income statement is sometimes presented as a separate account
referred to as the trading account