1. Financial Statements for a Proprietorship
Chapter 9, Section 1

2. Would you work for a year (or even a month) without knowing how much you would be making?

3. If you had $10,000 to invest in a company, what information would you want to know about that company before you invest?

4. https://finance.yahoo.com/quote/AAPL/balance-sheet?p=AAPL

5. Accounting Concepts CONCEPT: Adequate Disclosure
Financial statements contain all information necessary to understand a business’s financial condition.
CONCEPT: Accounting Period Cycle
Financial statements are always prepared at the end of the fiscal period.
CONCEPT: Going Concern
When financial statements are prepared with the expectation that a business will remain in operation indefinitely.

6. The Worksheet Single Underline indicates a subtotal.
Double Underline indicates the grand total or bottom line .

7. Income Statement Shows financial progress over a period of time
Includes revenue, expenses, and net income/loss
Data obtained from Income Statement columns of the worksheet

8. Preparing an Income Statement
1. Name of Company
2. Name of Report
3. Date of Report

9. Preparing an Income Statement (cont.)
When listing amounts, the two columns are used to indicate different levels of calculations.
First column is for account balances
Second column is for section totals
The columns are NOT debit and credit columns!
Sections include:
Revenue
Expenses
Net Income/Loss
Section headings are written at the left
Account titles are indented

10. Preparing an Income Statement (cont.)1 2 3 4 6 5 7 9 8 10 11 12 14 13
1. Write the name of the first section.
8. Write Total Expenses.
2. Write the title of the revenue account.
9. Record total expenses.
3. Record the balance of the account.
10. Rule a single line.
4. Write the name of the second section.
11. Calculate net income.
5. Write the title of each expense account.
12. Write Net Income.
6. Record the balance of each account.
13. Record net income.
7. Rule a single line.
14. Rule double lines.

11. Ratio Analysis
Percentage relationship between one financial statement item and the total that includes that item
Based on net sales
Return on Sales
Net Income or Loss ÷ Net sales

12. Completed Income Statement

13. Income Statement with Two Revenue Accounts and a Net Loss