CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 7-1 Preparing an Income Statement

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 7-1 INCOME STATEMENT INFORMATION ON A WORK SHEET page 182

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 7-1 HEADING OF AN INCOME STATEMENT page Center the name of the company on the first line. 2.Center the name of the report on the second line. 3.Center the date of the report on the third line.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 7-1 REVENUE, EXPENSES, AND NET INCOME SECTIONS OF AN INCOME STATEMENT 1 Revenue 3 Revenue amount 4 Expenses 5 Account titles 6 Expense amount 8 Total expenses 9 Total of expenses 12 Net Income 7 Single line Calculate net income 14 Double lines 13 Record net income 2 Account title page 183

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 7-1 COMPONENT PERCENTAGE ANALYSIS OF AN INCOME STATEMENT page 184

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 7-1 INCOME STATEMENT WITH TWO SOURCES OF REVENUE AND A NET LOSS 1 Revenue 3 Revenue amounts 2 Account titles 6 Net Loss 7 Record Net Loss 5 Total Revenue 4 Total of revenue page 185

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 7-1 TERMS REVIEW Stakeholders: any persons or groups who will be affected by an action. Component Percentage: percentage relationship between one financial statement item and the total that includes that item. Concepts: Adequate Disclosure: all information necessary to understand a business’s financial condition is found in the financial statements. Accounting Period Cycle: series of accounting activities included in recording financial information for a fiscal period. Going Concern: The expectation that a business will remain in operation indefinitely. Matching Expenses with Revenue: revenue earned and the expenses incurred to earn that revenue are reported in the same fiscal period. page 186

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 7-2 Balance Sheet Information on a Work Sheet

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 7-2 BALANCE SHEET page 187

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 7-2 HEADING OF A BALANCE SHEET page Center the name of the company on the first line. 2.Center the name of the report on the second line. 3.Center the date of the report on the third line.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 7-2 ASSETS AND LIABILITIES SECTIONS OF A BALANCE SHEET page Liabilities 1 Assets Total Liabilities8 2 Account titles 3 Asset amounts Single line 7 6 Liability amounts 5 Account titles Total of liabilities 9

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 7-2 OWNER’S EQUITY SECTION OF A BALANCE SHEET page Total Liab. and Owner’s Eq.5 Total Assets 1 Owner’s Equity 2 Account title 3 Capital amount 4 Single line 6 Total of assets 8 Total of Liabilities and Owner’s Equity 9 Compare totals 10 Double lines

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 7-2 OWNER’S EQUITY REPORTED IN DETAIL ON A BALANCE SHEET page Beginning capital amount 6 Difference 8 Current capital amount 1 Beginning capital 3 Net Income 4 Drawing Ending capital 7 9 Total Liabilities and Owner’s Equity 5 Single line