1. Expanded Ledger  Income Statement: Revenue, Expenses Drawings
REF CHAPTER 5, P
Practice: p.124 exercises #1,2,4
p. 126 exercises #3,5
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings

2. Revenue, Expenses & Drawings (dividends)
When a company earns money  the equity section of the balance sheet _________
When a company pays expenses and / or the owner takes money out of the business for personal use  the equity section of the balance sheet __________.
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings

3. Revenue, Expenses & Drawings (dividends)
REVENUES: 
EXPENSES:
DRAWINGS (or DIVIDENDS if a corporation)
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings

4. Expanded Ledger  Income Statement: Revenue, Expenses & Drawings
Example: Burt’s Pigeon Clean-up Inc. cleaned the sidewalk in front of the school and invoiced the school $500. remember double entry accounting DR=CR
Revenue (making money) increases equity
Increases in equity are credit entries
Revenue accounts are credited
A/R
Revenue
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings

5. Expanded Ledger  Income Statement: Revenue, Expenses & Drawings
are things (costs) that the company has to pay for in order to make revenue. Expenses ________ equity.
Examples of expenses:
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings

6. Expanded Ledger  Income Statement: Revenue, Expenses & Drawings
Example: Burt’s Pigeon Clean-up Inc. cleaned the sidewalk in front of the school and invoiced the school $500. On payday, Burt paid Earnie and Elmo $100 each for their clean up of the school; the cost of cleaning material for the job was $75.
Wages Exp.
Supply Exp.
Bank
Expenses (spending money) _________ equity
Decreases in equity are _______ entries
Expense accounts are debited
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings

7. Expanded Ledger  Income Statement: Revenue, Expenses & Drawings
Most businesses usually have one (sometimes a few) revenue accounts.
All expense accounts will usually have a debit balance.
Businesses have many different expense accounts.
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings

8. Expanded Ledger  Income Statement: Revenue, Expenses & Drawings
NET INCOME (NET LOSS):
The difference between the revenues and the expenses for a time period represents the profit for the business.
Revenue – Expenses = Net Income or Profit
Revenue Expenses = Net Profit
Revenue Expenses = Net Loss
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings

9. Expanded Ledger  Income Statement: Revenue, Expenses & Drawings
An owner of a business is entitled to some of the profits of the company, thus may withdraw money from the company (like a salary or dividends if a corporation) on a regular basis.
Drawings ___________ equity
Decreases in equity are debit entries
Drawings accounts are _______
However, drawings are ____________ because they have no bearing on the net income of the business (equity yes, profits no!)
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings

10. Expanded Ledger  Income Statement: Revenue, Expenses & Drawings
Example: Bert withdraws $200 cash and $50 of cleaning supplies form his company for personal use.
Drawings
 Bank
Supplies
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings

11. Sample Income Statement:
Bert's Pigeon Cleaning Ltd.
Income Statement
For the Month Ending July 30, 2---
Revenue
Cleaning Fees
$15,500
Expenses
Advertising
550
Vehicle
2040
Wages
7000
Other
275
Total Expenses
9865
Net Income
$5,635
Expanded Ledger  Income Statement: Revenue, Expenses & Drawings