Ch. 8 -- Preparing Financial Statements Mr. Belolan.

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Presentation transcript:

Ch Preparing Financial Statements Mr. Belolan

Objectives Analyze and complete the financial statements for a sole proprietorship 1. Explain the purpose of the income statement, statement of changes in owner’s equity and balance sheet 2. Prepare an income statement, statement of changes in owner’s equity and a balance sheet

The Accounting Cycle 1.Collect Source Documents 2.Analyze each transaction 3.Journalize in General Journal 4.Post to General Ledger 5.Prepare the Trial Balance 6.Prepare the Work Sheet 7.Prepare Financial Statements

Financial Statements 1.Income Statement 2.Statement of Change in Owner’s Equity 3.Balance Sheet 1.Fortune 500 CompaniesFortune 500 Companies

The Income Statement Shows net loss or gain Expense and Revenue accounts ONLY Temporary Accounts Loss or Gain matches amount on Work Sheet  Examples? Exxon Income Statement Wal-Mart Income Statement

The Statement of Change in Owner’s Equity Summarizes the Capital account 1.Beginning Capital 2.Add net income 3.Subtract Withdrawals 4.Equals Ending Capital

Balance Sheet A “Snapshot” of business’ financial position Lists Assets, Liabilities and Equity Permanent accounts ONLY  Examples?  Exxon Balance Sheet Exxon Balance Sheet  Wal-Mart Balance Sheet Wal-Mart Balance Sheet

Concept Review Name the three financial statements What is the source document to create the financial statements? Which financial statement is a “snapshot?”

Assignment Work Together Problems  Workbook Page 163,165