1 Income Statement

1.Buying a horse (for me!) 2.How much did I pay? 3.What do I have invested in it? 4.What to sell it for? Simple Transaction

1.In business we want to create a profit 2.The profit will increase the Owner’s Equity – increases the value of the business 3.A business sells goods or services in order to make REVENUE – amounts earned by a business from the sale of goods and services

1.In order to sell goods and services, money is spent to operate the business 2.EXPENSES – costs of items or services used up in the routine operation of the business 3.Thus revenue must be greater then expenses in order to have a profit 4.NET INCOME – is the preferred term for profit

1.REVENUE – EXPENSES = NET INCOME (LOSS) 2.Income results when revenue exceeds expenses 3.Loss results when expenses exceed revenue

1.A financial statement that summarizes the items of revenue and expenses and determines the net income or loss for a stated period of time 2.Accounting period or Fiscal period – period of time covered but the financial statements. May be a week, month, quarter, year, or any other regular period of time Income Statement

1.Turn to page 69 – income statement example 2.WORK  - page 73 – questions 1, ex 1,2