Identify the different names given to the income statement.Define each of the following terms and, where relevant, write down the mathematical equation that would help in calculating the figure.SalesCost of goods soldGross profitNet profitCalculate the cost of goods sold (COGS), given the following information:  $Sales 700 000Stock (opening) 100 000Purchases of stock 400 000Closing stock 50 000Using the figures from question 3, calculate gross profit.Using your workings from questions 3 and 4, calculate the value of net profit (or loss) if expenses for the period totalled $80 000.Anita Toparis owns and operates Petal’s Florist. Last year Anita had a sales revenue of $285 000. Her cost of goods sold totalled $115 000. Her operating expenses were: electricity $5000, advertising $11 000, interest charges $5000, salaries $62 000 and rent $25 000. Construct an income statement (statement of financial performance) for Anita and tell her whether she has made a net profit.Distinguish between selling, administrative and financial expenses, giving examples for each.Explain how an income statement can provide useful information to a business and its stakeholders.

1. The income statement is also known as the profit and loss statement, statement of earnings, statement of operations, or statement of income.

• Sales: This is the total amount of revenue generated by a business from selling its goods or services. There is no specific mathematical equation for sales, it's simply the total of all sales made.
• Cost of Goods Sold (COGS): This is the direct costs attributable to the production of the goods sold by a company. The equation for COGS is: Opening Stock + Purchases - Closing Stock.
• Gross Profit: This is the profit a company makes after deducting the costs associated with making and selling its products. The equation for Gross Profit is: Sales - COGS.
• Net Profit: This is the actual profit after working expenses not included in the calculation of the COGS have been paid. The equation for Net Profit is: Gross Profit - Expenses.

3. Using the given information, the COGS can be calculated as follows: Opening Stock ($100,000) + Purchases ($400,000) - Closing Stock ($50,000) =$450,000.

4. The Gross Profit can be calculated as follows: Sales ($700,000) - COGS ($450,000) = $250,000.

5. The Net Profit can be calculated as follows: Gross Profit ($250,000) - Expenses ($80,000) = $170,000.

6. For Anita's Florist, the income statement would look like this:

Sales: $285,000 COGS:$115,000 Gross Profit: $170,000 Expenses:

• Electricity: $5,000
• Advertising: $11,000
• Interest Charges: $5,000
• Salaries: $62,000
• Rent: $25,000 Total Expenses:$108,000 Net Profit: $62,000

Anita has made a net profit of $62,000.

• Selling expenses: These are the costs associated with selling a product or service, such as advertising and sales commissions.
• Administrative expenses: These are the costs associated with the general administration of the business, such as salaries and office supplies.
• Financial expenses: These are the costs associated with the financial activities of the business, such as interest charges and bank fees.

8. An income statement provides useful information to a business and its stakeholders by showing the company's revenues, costs, gross profit, and net profit. This allows stakeholders to assess the company's financial performance and profitability, which can inform decision-making and strategy.