The Income Statement Chapter 3

Thus far... What financial statement have we discussed? The Income Statement Thus far... What financial statement have we discussed? What does it ‘tell’ the reader? What other information would you like to know about a business that cannot be found on the statements we have looked at? In other words, how can you tell if a business is successful or not?

Defining Profit and Loss New terms – profit, revenue, expenses, net income, net loss, income statement, accounting period Using your list of key terms match the appropriate term and definition

The Income Statement 2nd major financial statement that every business prepares 1st was the Balance Sheet! Summarizes revenues and expenses for a company Determines net income or net loss Completed for a stated period of time, called the accounting or fiscal period

Common Revenue & Expense Accounts Expenses Sales Revenue Income Fees Earned Rent Earned Any amounts earned by the business! Rent Expense Salaries Utilities Maintenance Expense Telephone Any bills already paid by the business!

Income Statement Preparation Prepare heading (Who? What? When?) Note that Income Statements are completed for a period of time! Prepare Revenue section – all money earned from the sale of goods or services Prepare Expense section – the cost of items or services used up in the operation of the business Determine Net Income or Net Loss

Example – Goldman’s Gym Header Notice the date! Revenue Section Expense Section Net Income or Loss