www.
mrzeesresour
ces.com
Income
00/00/2
1
statemen
t1
Must understand what an Recap/Do Now
income statement shows
Should recall the structure of an
income statement
Could complete a basic income
statement
Pete’s Pizza Parlour
Pete runs a takeaway pizza shop in Dagenham. He
has been open for 12 months and is drawing up his
first income statement.
Let’s walkthrough how he will draw up his income
statement
Pete’s sales/revenue are as42,00
follows; 0
6,000 x pizzas at £7 each 15,00
10,000 x chips at £1.50 each 0
8,000 x garlic bread at £4 each 32,00
0
He has calculated his revenue to be
£89,0
00
Pete’s Pizza Parlour Income statement
Revenue £89,000
Less: Cost of sales
= Gross profit
Less: expenses
= Net profit
Cost of sales
Next we need to work out how much it has cost him to buy his
raw materials to make these goods.
Cost of sales = (opening stock + purchases)
– closing stock
Opening stock i.e. Stock left over from last year
Does Pete have any opening stock?
Pete’s purchased the
following;
£6,000
Prepared dough 2,000 packets at
£3 each £2,800
Frozen chips 280 boxes at £10 £1,200
each
£ 600
Toppings £1200
TOTAL =
Other £600
£10,600
Pete’s Pizza Parlour Income statement
Revenue £89,000
Less: Cost of sales £10,600
£78,400
= Gross profit
Less: expenses
= Net profit
Expenses
What else will we have to take off Pete’s gross
profit figure?
Expenses i.e. The general costs of running the
business
For example.....
Pete’s expenses are as
follows;
Wages £10,000
Rent £12,000
Advertising £ 2,500
Insurance £ 1,000
Vehicle £5,000
Telephone £ 3,000
Utilities £ 5,000
£38,500
Pete’s Pizza Parlour Income statement
Revenue £89,000
Less: Cost of sales £10,600
£78,400
= Gross profit £38,500
Less: expenses £39,900
= Net profit
Income statement for Beale’s Plaice
Your task (25 mins)
Complete the income statement for Beale’s
Plaice for the year ended 31st December 2015
Fold sheet from margin and glue in. Extension to be answered in exercise book.
Self-assess as we go through...
Your task (30 mins)
Complete the income statement for The Argee
Bhajee for the year ended 31st December 2015
Fold sheet from margin and glue in. Extension to be answered in exercise book.
Self-assess as we go through...
Challenge: Create your own
figures for a chicken shop, then swap
with a partner (they create the income
statement from your figures)
Pair task – Mnemonic to remember the
structure of income statement (2 mins)
Revenue
Less cost of
sales
Gross profit
Less expenses
Net profit
Written questions (20 mins)
In your exercise book:
1. Two purposes of an income statement
2. Describe the structure of an income
statement (describe each section)
Challenge: From looking at Ian Beales and
Argee Bargees income statements, would
you recommend me to invest in any of the
two? If yes, which one and why? If not,
why?
1 you recall
Can 2 3
the structure Lucky box
Can you guess what
of the income the next lesson will be
You get to choose
someone else to pick
statement? about? a box
4 5 does an
What 6
Another word for
Manchester united vs Arsenal income statement income statement?
tomorrow...Who wins?
show?
Extension: first player to score?
7You get
Very lucky box Picture
8 the structure Does
9 the income
to choose someone
of the income
else to pick a box and you can’t statement show
be picked again statement. How do profit/loss for a
we get the gross previous period or a
profit figure? future period?
