Lesson 1, Topic 1
In Progress

2.1 The importance of cash flow management in a business is discussed in terms of the principles of a healthy business practice.

ryanrori January 13, 2021

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A company’s income and expenditure statement is a record of its earnings or losses for a given period. It shows all the money a company earned (revenues) and all the money a company spent (expenses) during this period. It also accounts for the effects of some basic accounting principles such as depreciation. The income statement is important because it’s the basic measuring stick of profitability .

What are income statements used for?:

You use an income statement to track revenues and expenses so that you can determine the operating performance of your business over a period of time. Small business owners use these statements to find out what areas of their business are over budget or under budget. Specific items that are causing unexpected expenditures can be pinpointed, such as phone, fax, mail, or supply expenses. Income statements can also track dramatic increases in product returns or cost of goods sold as a percentage of sales. They also can be used to determine income tax liability.