1. Chapter – 17 Introduction to Business (BUS 201) Course Instructor: Sadia Haque

2.  The financial statement that shows a firm’s profit after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm (revenue), all the resources that have left the firm, and the resulting net income.

3.  The monetary value of what a firm received for goods sold, services rendered, and other payments (e.g. rent received).

4.  A measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale. ◦ Cost of goods sold includes the purchase price plus any freight charges paid to transport goods, plus any costs associated with storing the goods.

5.  It refers to how much a firm earned by buying (or making) and selling merchandise. ◦ When we subtract the costs of good sold from net sales, we get gross profit or gross margin.

6.  Costs involved in operating a business, such as rent, utilities, supplies, insurance, and salaries. ◦ Depreciation: The systematic write-off of the cost of a tangible asset over its estimated useful life.

7.  After deducting all expenses, we can determine the firm’s net income before taxes, also referred to as net earnings or net profit.  After allocating for taxes, we get the net income (or net loss) the firm incurred from revenue minus sales returns, costs, expenses, and taxes over a period of time.