Accounting Bellwork 3 rd Hour: What information do you find in the heading of an accounting document.

Section 2Extending Amounts Across the Work Sheet What You’ll Learn  How to extend amounts to the Balance Sheet and Income Statement sections.  The importance of the matching principle.  How to calculate and show the net income or net loss on the work sheet. What You’ll Learn  How to extend amounts to the Balance Sheet and Income Statement sections.  The importance of the matching principle.  How to calculate and show the net income or net loss on the work sheet.

Why It’s Important Preparing the work sheet helps you understand the relationship of all ledger accounts and where they are reported. Why It’s Important Preparing the work sheet helps you understand the relationship of all ledger accounts and where they are reported. Section 2Extending Amounts Across the Work Sheet (con’t.) Key Terms  matching principle  net income  net loss Key Terms  matching principle  net income  net loss

The Balance Sheet Section Balancing the ALOE The Balance Sheet Section Balancing the ALOE Section 2Extending Amounts Across the Work Sheet (con’t.)

The Income Statement Section Income --- Revenue and Expenses The Income Statement Section Income --- Revenue and Expenses Section 2Extending Amounts Across the Work Sheet (con’t.)

Totaling the Income Statement and Balance Sheet Sections Section 2Extending Amounts Across the Work Sheet (con’t.)

Showing Net Income on the Work Sheet Section 2Extending Amounts Across the Work Sheet (con’t.) Net income is when revenue is greater than expenses

Matching Principle is when expenses incurred in an accounting period are matched with revenue earned during the same period in order to provide a reliable measure of profit. Section 2Extending Amounts Across the Work Sheet (con’t.)

Net income is the amount of revenue that remains after expenses for the period are subtracted. Section 2Extending Amounts Across the Work Sheet (con’t.) Totals should be equal.

Completing the Work Sheet Section 2Extending Amounts Across the Work Sheet (con’t.)

Completing the Work Sheet Section 2Extending Amounts Across the Work Sheet (con’t.) A net loss occurs when the expenses are greater than the revenue.

Demonstration Problems Ch8 Problems 8-4 through 8-6

NET INCOME Be sure that your numbers fit in the space provided. I have mine bigger so that you can see them easier.

NET LOSS

Check Your Understanding p194 Thinking Critically 1 & 2 Computing in the Business World Problem 8-3 Thinking Critically 1 & 2 Computing in the Business World Problem 8-3 Section 2Extending Amounts Across the Work Sheet (con’t.)