IB Business Management –
Finance and Accounts 3.4 Final
Accounts [2026/2027] Updated
PDF | Verified Questions &
Detailed Explanations
The *two* main business accounts: - ANSWER-1. Profit and Loss Account
(*income statement*)
2. Balance sheet
Profit and Loss Account - ANSWER-A financial statement showing a company's net
profit or loss in a given period.
Three *sections* of an *income statement*: - ANSWER-1. *Trading account*
2. *Profit and loss account*
3. *Appropriation account*
Gross profit - ANSWER-*Gross profit* = *sales revenue less cost of sales*
, Sales revenue - ANSWER-The total value of sales made during the trading period =
*selling price x quantity sold* (sales turnover)
Sales turnover - ANSWER-The total value of sales made during the trading period
= *selling price x quantity sold* (sales revenue) Sales revenue
Cost of sales - ANSWER-This is the *direct cost* of purchasing the goods that were
sold during the financial year (cost of goods sold)
Cost of goods sold - ANSWER-This is the *direct cost* of purchasing the goods that
were sold during the financial year (cost of sales)
Operating profit - ANSWER-Operating profit = *gross profit - overhead expenses*
(net profit)
Net profit - ANSWER-Net profit = *gross profit - overhead expenses* (net profit)
Dividends - ANSWER-The share of profits paid to shareholders as a return for
investing in a company
Retained profit - ANSWER-The profit left after all deductions, including dividends,
have been made. This is 'ploughed back' into the company as a source of finance
Low-quality profit - ANSWER-One-off profit that cannot easily be repeated or
sustained
Finance and Accounts 3.4 Final
Accounts [2026/2027] Updated
PDF | Verified Questions &
Detailed Explanations
The *two* main business accounts: - ANSWER-1. Profit and Loss Account
(*income statement*)
2. Balance sheet
Profit and Loss Account - ANSWER-A financial statement showing a company's net
profit or loss in a given period.
Three *sections* of an *income statement*: - ANSWER-1. *Trading account*
2. *Profit and loss account*
3. *Appropriation account*
Gross profit - ANSWER-*Gross profit* = *sales revenue less cost of sales*
, Sales revenue - ANSWER-The total value of sales made during the trading period =
*selling price x quantity sold* (sales turnover)
Sales turnover - ANSWER-The total value of sales made during the trading period
= *selling price x quantity sold* (sales revenue) Sales revenue
Cost of sales - ANSWER-This is the *direct cost* of purchasing the goods that were
sold during the financial year (cost of goods sold)
Cost of goods sold - ANSWER-This is the *direct cost* of purchasing the goods that
were sold during the financial year (cost of sales)
Operating profit - ANSWER-Operating profit = *gross profit - overhead expenses*
(net profit)
Net profit - ANSWER-Net profit = *gross profit - overhead expenses* (net profit)
Dividends - ANSWER-The share of profits paid to shareholders as a return for
investing in a company
Retained profit - ANSWER-The profit left after all deductions, including dividends,
have been made. This is 'ploughed back' into the company as a source of finance
Low-quality profit - ANSWER-One-off profit that cannot easily be repeated or
sustained
