July 2020 Level II Training Book

12/3/19

INCOME STATEMENT INCOME STATEMENT, ALSO KNOWN AS THE PROFIT AND LOSS STATEMENT, REPORTS THE COMPANY'S FINANCIAL PERFORMANCE IN TERMS OF NET PROFIT OR LOSS OVER A SPECIFIED PERIOD. INCOME STATEMENT IS COMPOSED OF THE FOLLOWING TWO ELEMENTS: • INCOME : WHAT THE BUSINESS HAS EARNED OVER A PERIOD (E.G. SALES REVENUE, DIVIDEND INCOME, ETC) • EXPENSE : THE COST INCURRED BY THE BUSINESS OVER A PERIOD (E.G. SALARIES AND WAGES, DEPRECIATION, RENTAL CHARGES, ETC) • NET PROFIT OR LOSS IS ARRIVED BY DEDUCTING EXPENSES FROM INCOME.

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CASH FLOW STATEMENT

CASH FLOW STATEMENT , PRESENTS THE MOVEMENT IN CASH AND BANK BALANCES OVER A PERIOD. THE MOVEMENT IN CASH FLOWS IS CLASSIFIED INTO THE FOLLOWING SEGMENTS: • OPERATING ACTIVITIES : REPRESENTS THE CASH FLOW FROM PRIMARY ACTIVITIES OF A BUSINESS. • INVESTING ACTIVITIES : REPRESENTS CASH FLOW FROM THE PURCHASE AND SALE OF ASSETS OTHER THAN INVENTORIES (E.G. PURCHASE OF A FACTORY PLANT) • FINANCING ACTIVITIES : REPRESENTS CASH FLOW GENERATED OR SPENT ON RAISING AND REPAYING SHARE CAPITAL AND DEBT TOGETHER WITH THE PAYMENTS OF INTEREST AND DIVIDENDS.

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