Financial statements
Introduced| English | Meaning |
|---|---|
| financial statements/faɪˈnænʃl ˈsteɪtmənts/ | financial statements |
| income statement/ˈɪŋkʌm ˈsteɪtmənt/ | A financial statement reporting income, expenses and profit or loss over a period. |
| revenue/ˈrevənjuː/ | Income received by a business from selling goods or services before costs are deducted. |
| cost of sales/kɒst ɒv seɪlz/ | The cost attributable to goods or services sold during an accounting period. |
| gross profit/ɡrəʊs ˈprɒfɪt/ | Sales revenue minus the cost of goods sold. |
| operating profit/ˈɒpəreɪtɪŋ ˈprɒfɪt/ | Profit from operating activities after operating costs but before finance costs and tax. |
| statement of financial position/ˈsteɪtmənt ɒv faɪˈnænʃl pəˈzɪʃn/ | A financial statement showing an organisation's assets, liabilities and equity at a particular date. |
| assets/ˈæsets/ | Resources owned or controlled by a person or organisation that are expected to provide value or future benefits. |
| liabilities/ˌlaɪəˈbɪlɪtiz/ | Present obligations of a person or organisation that require future transfers of resources to settle. |
| equity/ˈekwɪti/ | The owners' residual interest in a business's assets after liabilities are deducted. |
| balance sheet/ˈbæləns ʃiːt/ | A statement of an organisation's assets, liabilities and equity at a particular date. |
The story the numbers tell
- Every business keeps score with two key documents: one shows whether it made a profit, the other what it owns and owes.
- Together, these financial statements 财务报表 reveal the firm's health.
Financial statements flow
See how business events become the statements users read.
Revenue is 250 and cost of sales is 160. What is the gross profit?
Difficulty 2/5 · 140 coins + a small bonus on first completion today
Gross profit = 250 − 160 = 90.
Gross profit is 90 and expenses are 55. What is the operating profit?
Difficulty 2/5 · 140 coins + a small bonus on first completion today
Operating profit = 90 − 55 = 35.
Revenue minus cost of sales gives ______ profit.
Difficulty 1/5 · 100 coins + a small bonus on first completion today
Gross profit, before expenses are deducted.
The income statement 利润表
- The income statement shows revenue 营业收入, costs and profit over a period.
- Revenue − cost of sales 销售成本 = gross profit 毛利润; gross profit − expenses = operating profit 营业利润.
Worked example. Revenue 200, cost of sales 120 → gross profit = 80. Expenses 50 → operating profit = 80 − 50 = 30.
The statement of financial position 财务状况表 balances: assets 资产 equal liabilities 负债 plus equity 所有者权益
On the statement of financial position, total assets always equal:
Difficulty 1/5 · 100 coins + a small bonus on first completion today
Assets = liabilities + equity — the balance sheet balances.
The statement of financial position
- Also called the balance sheet 资产负债表, it shows assets, liabilities and equity at a point in time.
- It always balances: assets = liabilities + equity.
Which is a current asset?
Difficulty 1/5 · 100 coins + a small bonus on first completion today
Cash is a current asset; buildings and machinery are non-current.
Assets and liabilities
- Non-current assets (machines, buildings) vs current assets (cash, inventory, debtors).
- Current liabilities (due within a year) vs non-current liabilities (long-term loans).
You've got it
- the income statement: revenue − cost of sales = gross profit; − expenses = operating profit
- the statement of financial position shows assets, liabilities and equity (assets = liabilities + equity)
- assets and liabilities split into current (≤1 year) and non-current