Question

2.1.4 King Code D This shows the financial performance of a business for a financial year (4 X 1) = (4) 1.2 KINGSTON TRADERS The information relates to the financial year ended 29 February 2020. Goods are sold at a profit mark-up of 40% on cost. REQUIRED: Prepare the Income Statement (Statement of Comprehensive Income) for (46) the year ended 29 February 2020),​

Answer 1

Both of these choices are correct as they are rightly presented.

      KINGSTON TRADERS

Statement of Comprehensive Income

For the Year Ended February 29, 2020

Net income                                $140,000

Other comprehensive income $20,000

Comprehensive income         $160,000

             KINGSTON TRADERS

               Income Statement

For the Year Ended February 29, 2020

Sales                                     $625,000

Cost of goods sold              $350,000

Gross profit                          $275,000

Operating expenses            $135,000

Net income                           $140,000

Other comp. income            $20,000

Comprehensive income     $160,000

The terms "profit" and "income" are often used interchangeably in life. In corporate finance, however, those terms could have very different and specific meanings, depending on the context in which they are used.

while income does mean positive flow of cash right into a business, net income is something much more complex. profit is generally understood to refer to the cash that is left over after accounting for expenses. although each gross earnings and working profit fit this definition in the simplest sense, the kinds of income and expenses which are accounted for differ in important ways

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