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What does finance cost means? and In income Statement? What should be included ? Like If he says he paid 25 Intrest and intrest for the year 50? how we will treat that??
In Cash Flow Statement if he Does not provide us the profit before tax. he provides us the operating profit how we can go to the Profit before tax? what we can deduct from Operating profit??
I think that your first paragraph is asking for an accrual to be made. If interest for the year is $50, and the company has paid only $25, then an accrual needs to be made in the SoFP. In the cash flow however, only the $25 actually paid will be shown.
Your question asks “What does finance cost mean?” Included in Finance Costs in the Income Statement are the costs of borrowing funds – in any form – to finance the running of the business.
If you are talking about the question I’m thinking about, there were only 1 or 2 adjustments to make to operation profit in order to arrive at pbt. If you think in general terms that pbt is “Operating profit less administrative expenses, distribution costs and finance charges and plus investment income” then it should be obvious from the question which figures need to be used to arrive successfully at pbt
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