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Financial Statements
The Income StatementSection 9.1
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Glencoe Accounting Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Financial Statements
The Income StatementSection 9.1
Four Types of Financial Statements
Income Statement
Balance Sheet
Statement of Changes in Owner’s Equity
Statement of Cash Flows
financial statementsReports prepared to summarize the changes resulting from
business transactions that occur during an accounting period.
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The Income Statement
The Income StatementSection 9.1
income statementA report of the net income or net loss for a specific period;
sometimes called a profit-and-loss statement or earnings statement.
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The Income Statement
The Income StatementSection 9.1
The Heading
Name of the business
Name of the report
Period covered
See page 224
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The Income Statement
The Income StatementSection 9.1
A
B
C
Revenue Section
Write Revenue.
Enter revenue account names and balances. If only one listed, enter amount in right column, as shown.
Enter the balance of each revenue account.
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The Income Statement
The Income StatementSection 9.1
D
E
F
G
H
Write Expenses.
Enter expense account names and balances.
Draw a single rule line under the last balance.
Expenses Section
Write Total Expenses.
Add the balances for the expense accounts and enter total below the single rule line – in the right column.Home
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The Income Statement
The Income StatementSection 9.1
I
J
K
L
Draw a single rule line under thetotal expenses amount.
Subtract the total expenses fromtotal revenue.
Write Net Income (or Net Loss).
Net Income/Net Loss Section
If amount matches the amount on the work sheet, draw a double rule beneath the amount.
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The Income Statement
The Income StatementSection 9.1
Reporting a Net Loss
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The Statement of Changesin Owner’s EquitySection 9.2
The Statement of Changes in Owner’s Equity
Information needed to
prepare the statement of changes in
owner’s equity
statement of changes in owner’s equityA financial statement that summarizes changes in the owner’s capital
account as a result of business transactions during the period.
The owner’s capital account in the general ledger
The work sheet
The income statement
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Completing the Statement of Changes in Owner’s Equity
The Statement of Changesin Owner’s EquitySection 9.2
Steps for Completing the Statement of Changes in Owner’s Equity
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Completing the Statement of Changes in Owner’s Equity
The Statement of Changesin Owner’s EquitySection 9.2
Statement of Changes in Owner’s Equity Showing a Net Loss
Island Burgers
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Completing the Statement of Changes in Owner’s Equity
The Statement of Changesin Owner’s EquitySection 9.2
There are two ways to determine the owner’s capital account balance:
Look at the ledger.
Subtract additional investments from the balance shown on the
work sheet.
For an ongoing business, the capital account balance on the work sheet may not be the balance at the beginning of the period.
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• The income statement reports the net income or net loss for an accounting period.
• The statement of changes in owner’s equity shows how the owner’s financial interest changes during the accounting period.
• The balance sheet reports the financial position at a specific point in time.
• The statement of cash flows reports the sources and uses of cash during the accounting period.
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Assignment
Together – Income Statement & Statement of
Changes in Owner’s Equity in Excel using Mini Practice Set 1 Info
Connect – Chap 9 Sections 1&2
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