Financial Statements for a Proprietorship Chapter 8 Financial Statements for a Proprietorship

Income Statement Reports financial progress of a business over a specific period of time. Information needed to prepare an Income Statement is obtained from two places on the WS: Account titles are obtained from Account title column Account balances are obtained from Income Statement columns The two columns on the income statement are not debit and credit columns. The first column is for listing numbers, the second column is for totals.

Income Statement for a Service Business Has four sections: Heading - contains name of business, name of statement, date Revenue - written at the extreme left of column; write the revenue account for Sales on the next line indented about 1 centimeter Expenses - same as revenue Net income or net loss

Component Percentage The percentage relationship between one financial statement item and the total that includes that item.

Total Expenses Component Percentage Total Expenses  Total Sales = Component% $3,395.00  $4,291.00 = 79.1%

Total Income Component Percentage Net Income  Total Sales = Component % $896.00  $4,291.00 = 20.9%

Balance Sheet Reports financial condition of a business on a specific date. Has four sections: Heading - name of business, name of statement, date Assets Liabilities Owner’s equity - type of equity

Capital Capital is not copied from the WS to the balance sheet. Formula for calculating current capital: Capital Account Drawing Acct (+) Net Income Current Balance - Balance (-) Net Loss = Capital