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Profit and Loss Calculations Overview

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Questions and Answers

What is the formula for Operating Profit?

Gross Profit - Distribution Costs - Administration Costs (correct)

Gross Profit - Revenue

Gross Profit - Finance Costs

Revenue - Cost of Sales - Taxation

Profit After Tax is calculated by adding Taxation to Profit Before Tax.

False (B)

Define Total Comprehensive Income.

Total Comprehensive Income is Profit After Tax plus Other Comprehensive Income (OCI).

EPS is calculated as Profit after tax and preferred dividend divided by _____ average number of shares.

<p>weighted</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Gross Profit = Revenue minus Cost of Sales Profit Before Tax = Operating Profit minus Finance Costs EPS = Profit After Tax and preferred dividend divided by weighted average shares Retained Earnings = Prior retained earnings plus Profit for period minus Dividends paid</p> Signup and view all the answers

Study Notes

Profit and Loss Calculations

Gross Profit is calculated by subtracting Cost of Sales (COS) from Revenue
Operating Profit is found by subtracting Distribution Costs and Administration Costs from Gross Profit
Profit Before Tax is calculated by subtracting Finance Costs from Operating Profit
Profit After Tax is determined by subtracting Taxation from Profit Before Tax
Total Comprehensive Income is the sum of Profit After Tax and Other Comprehensive Income (OCI)

EPS is calculated by dividing Profit after tax and preferred dividend by the weighted average number of shares

Retained Earnings

Retained Earnings in the trial balance, minus profit for the period, minus dividend paid, equals the retained earnings financial position.

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Description

This quiz covers key concepts related to profit and loss calculations, including gross profit, operating profit, and earnings per share (EPS). You'll also learn about retained earnings and total comprehensive income. Test your understanding of these important financial metrics.