1. Financial Statements for a Proprietorship
Chapter 8
Financial Statements for a Proprietorship

2. 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.

3. 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

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

5. Total Expenses Component Percentage
Total Expenses  Total Sales = Component%
$3,  $4, = %

6. Total Income Component Percentage
Net Income  Total Sales = Component %
$  $4, = 20.9%

7. 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

8. 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