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Business Studies IGCSEPDF 159
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5.3 Income Statements (Profit and Loss Accounts)
Structure:
5.4 Balance Sheets (Statement of Financial Position)
Shows assets, liabilities, and capital at a specific date.
Structure:
Formulas:
1. Revenue (Sales)
2. Cost of Sales (COGS)
→ Opening Inventory + Purchases – Closing Inventory
3. Gross Profit = Revenue – COGS
4. Operating Expenses: rent, wages, admin.
5. Operating Profit = Gross Profit – Expenses
6. Profit before tax = Operating profit – Interest
7. Profit after tax = Profit before tax – Tax
Use:
● Compare performance over time.
● Assess profitability.
● Inform investors and management.
Assets
Non-current assets: buildings,
machinery
Current assets: inventory, cash,
receivables
Liabilities & Capital
Non-current liabilities: long-term loans
Current liabilities: creditors, overdraft
Owner’s Equity / Capital: share capital +
retained profit