1. INCOME STATEMENT 1. Net Sales 2. Net Purchases
3. Income from Operations 1
4. Net Income before and after Federal Income Tax 2 3 4
Lesson 26-1, page 662 4

2. ANALYZING AN INCOME STATEMENT
Acceptable Actual
Income Statement Items Component Component
Percentages Percentages
Net sales % %
Cost of merchandise sold not more than 58.0% 54.2%
Gross profit on operations not more than 42.0% 45.8%
Total operating expenses not more than 35.0% 32.9%
Income from operations not less than 7.0% 12.9%
Net deduction not more than 0.1% 0.1%
Net income before federal income tax not less than 6.9% 12.8%
Lesson 26-1, page 664

3. TERMS REVIEW
net sales
net purchases
Lesson 26-1, page 665