The Income Statement

Revenues Money or promise of money received from the sale of goods and services Money or promise of money received from the sale of goods and services Examples: Examples: Ticket Sales Repair Revenue Legal Services/Fees Shoe Sales Furniture Sales Expenses Items used to help generate the revenue in a business Examples: Telephone Salaries Advertising Rent Utilities

The Income Statement A financial statement used to help a business calculate and report its profit or loss on business operations, over a specific period of time.

Remember… Remember… Revenue – Expenses = Profit/Loss How much we make – how much we spend

Formatting Net Income/Loss is double underlined 2 columns – inner column for listing revenue/expenses, outer column for totals Date always reads “specific time period ended specific date” Month ended March Month ended March Year ended June Year ended June A “fiscal year” simply means an accounting year – the business may not have started precisely on January 1 st ! A “fiscal year” simply means an accounting year – the business may not have started precisely on January 1 st !

Preparing an Income Statement Mark’s revenue comes from repairs Repairs Revenue $9900 Repairs Revenue $9900 Mark’s expenses Salaries 2600 Rent 2000 Advertising 850 Supplies Expense 185 Utilities 235 Insurance 150 Delivery 770 Total Expenses?

Mark’s Repair Shop Income Statement Month Ended March Revenue Repairs Revenue9900 Total Revenue9900 Expenses Advertising 850 Delivery 770 Insurance 150 Rent2000 Salaries2600 Supplies 185 Utilities 235 Total Expenses6790 Net Income3110

Exercise 1 Prepare an income statement for the Law Office of Dewey, Cheetham and Howe for the month ended December , using the following information: Fees $ Investment Income $32000 Salaries $12 750Rent $7600 Insurance $5000Advertising $3299 Office Expenses $2344 Transportation Expenses $5460 Promotion Expenses $3800

Law Office of Dewey, Cheetham and Howe Income Statement month ended December 31, 2013 Revenue Fees Investment Income Total Revenues Expenses Advertising Insurance Office Promotion Rent Salaries Transportation Total Expenses Net Income

Exercise 2 Prepare an income statement for Brookfield Laundromat for the fiscal year ending June Select the necessary accounts from the ones listed below. (HINT: some of them would belong on a Balance Sheet) Cash $ Accounts Receivable $633 Laundry Supplies $651 Machinery/Equipment $13900 Trucks $27050 Accounts Payable $1746 Bank Loan $23000 A. Ottawa, Capital $ Sales $ Insurance $7171 Miscellaneous Expenses $225 Rent $22000 Telephone $ Truck Repairs $ Utilities Expense $ Wages $

Brookfield Laundromat Income Statement year ending June 30, 2013 Revenue Sales Total Revenues Expenses Insurance Miscellaneous Rent Telephone Truck Repairs Utilities Wages Total Expenses Net Income (1.00)

Which Statement Is It? 1.Accounts Receivable 2.Cash 3.Telephone Expense 4.Loan 5.Supplies Expense 6.Sales 7.Lawyer Fees Charged 8.Accounts Payable 9.Land 10.Inventory to sell 11.Bank Charges 12.Miscellaneous 1.Balance Sheet 2.Balance Sheet 3.Income Statement 4.Balance Sheet 5.Income Statement 6.Income Statement 7.Income Statement 8.Balance Sheet 9.Balance Sheet 10.Balance Sheet 11.Income Statement 12.Income Statement