Trigger 7

1.    What is the difference between income statement and balance sheet?

Income statement:

- As a profit or loss statement during a specific period of time, summary of how the profit or loss is calculated from gross revenue and expences.

- Keep in mind that the income statement shows revenues, expenses, gains, and losses; it does not show cash receipts (money you receive) nor cash disbursements (money you pay out).

Balance sheet:

- A Balance Sheet is a statement of the financial position of a business which states the assets, liabilities, and owners' equity at a particular point in time. In other words, the balance sheet illustrates your business's net worth.

- Snapshots at a given moment.

2.    When is the business profitable?

Profit is not the same as cash or sales, and it's not the money in the bank or on hand. Profit is represented 'on paper' in your accounting system.

To be more profitable you need to understand the concepts of profit margins and profit drivers. You can then develop strategies to increase your profits, including ways to increase your sales revenue, your profit on individual products and services, and decrease costs.

3.    What to consider in pricing?

- The higher the selling price, the lower volume of sales required (and vice-versa).

- One of the four P's in marketing

- There's different price strategies / tactics

Sources:

https://www.accountingcoach.com/income-statement/explanation

(https://www.business.qld.gov.au/running-business/finances-cash-flow/managing-money/more-profit)