9.2 - PART B PREPARING FINANCIAL STATEMENTS THE INCOME STATEMENT BBI 2O Name:

THE INCOME STATEMENT Total Assets

THE INCOME STATEMENT Prepare a Balance Sheet for Mrs. Talbot Supplies7 150 Taxes Payable Building Accounts Payable Cash Salaries Payable Equipment Bank Loan Accounts Receivable Mortgage Payable Inventory40 030

THE INCOME STATEMENT Creditors Copy Figure 9.2 in your notes

THE INCOME STATEMENT Company B makes $100,000 per year Company A makes $10,000 per month

THE INCOME STATEMENT An income statement always refers to a period of time thereby indicating how long it took to earn that money. Its purpose is to record whether a business is earning a profit or running a loss. If a business makes more revenue than it pays out in expenses, it will earn a net income. If a business incurs more expenses than it receives in revenue, it will suffer a net loss.

THE INCOME STATEMENT WHO?Mrs. T’s Computer Emporium WHAT?Income Statement WHEN?For the month ending October 31, 2015

THE INCOME STATEMENT Revenue Computer Sales Revenue5 400 Computer Repairs Revenue4 500 Total Revenue

THE INCOME STATEMENT Expenses Salaries2 600 Rent2 000 Advertising850 Supplies185 Utilities235 Insurance150 Delivery Expense770 Total Expenses

THE INCOME STATEMENT Total Revenue Net Income (Net Loss) Net Income (Net Loss) Total Expenses

Mrs. T’s Computer Emporium Income Statement For the month ending October 31, 2014 Revenue Computer Sales Revenue5 400 Computer Repairs Revenue4 500 Total Revenue Expenses Salaries2 600 Rent2 000 Advertising850 Supplies185 Utilities235 Insurance150 Delivery Expense770 Total Expenses Net Income (Net Loss)

THE INCOME STATEMENT When preparing an income statement, it is very important that the expenses are shown on the same month with the revenue they helped generate. This means that if the expense occurs in one month, and the revenue is generated in another. The expenses for that revenue must be included on the month of the revenue. Read pages 288 to 289 and use table 9.1 to better understand this concept

THE INCOME STATEMENT Define the following terms Matching Principle Inventory Gross Profit Costs of Goods Sold Fiscal Year

THE INCOME STATEMENT Pretend that you own a pharmacy. What types of goods would you stock on your shelves? Would you have to buy a lot of inventory? How much would it cost the business for inventory? Would you sell the inventory to your customers for the same amount? Explain.

THE INCOME STATEMENT Revenue Gross Profit Costs of Goods Sold Gross Profit Net Income Expenses

Using the sheets provided to complete the following questions for homework: Pg #5, 6, 7, 8, & 20 THE INCOME STATEMENT