The Accounting Cycle Analyze Source Documents Journalize Transactions Post to Ledgers Prepare a Worksheet Prepare Financial Statements Income Statement Balance Sheet LESSON 7-1

Why do Accountants do Financial Statements? To summarize financial information to interpret to clients Much easier to understand than looking at ledgers Used to make business decisions LESSON 7-1

Preparing an Income Statement Revenue Expenses Net Income/Loss LESSON 7-1 4/25/2018 LESSON 7-1 Preparing an Income Statement Revenue Expenses Net Income/Loss Component Percentages

INCOME STATEMENT INFORMATION ON A WORK SHEET page 182 LESSON 7-1

HEADING OF AN INCOME STATEMENT page 182 1 2 3 1. 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. LESSON 7-1

REVENUE, EXPENSES, AND NET INCOME SECTIONS OF AN INCOME STATEMENT page 183 7 Single line 1 Revenue 2 Account title 3 Revenue amount 4 Expenses 5 Account titles 6 Expense amount 8 Total expenses 9 Total of expenses 11 Single line 13 Record net income 12 Net Income 14 Double lines 10 Calculate net income LESSON 7-1

COMPONENT PERCENTAGE ANALYSIS OF AN INCOME STATEMENT page 184 LESSON 7-1

INCOME STATEMENT WITH TWO SOURCES OF REVENUE AND A NET LOSS page 185 5 Total Revenue 1 Revenue 2 Account titles 3 Revenue amounts 4 Total of revenue 6 Net Loss 7 Record Net Loss LESSON 7-1

Work Together Problem Complete Workbook pages: 147, 148, 151 LESSON 7-1