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Statement of Income

The document discusses income statements, which present an entity's results of operations over a period of time. An income statement includes revenues, costs of sales, expenses, and net income or loss. It then provides details on the elements of an income statement, such as types of revenues and expenses. Finally, it describes single-step and multistep approaches to preparing an income statement.

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Ugly Duckling
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219 views19 pages

Statement of Income

The document discusses income statements, which present an entity's results of operations over a period of time. An income statement includes revenues, costs of sales, expenses, and net income or loss. It then provides details on the elements of an income statement, such as types of revenues and expenses. Finally, it describes single-step and multistep approaches to preparing an income statement.

Uploaded by

Ugly Duckling
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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STATEMENT

OF INCOME
STATEMENT OF INCOME
(ALSO CALLED PROFIT AND LOSS
STATEMENT) PRESENTS AN
ENTITY’S RESULT OF OPERATIONS
FOR A PERIOD OF TIME.
THE INCOME STATEMENT OF A SOLE
PROPRIETORSHIP SHALL INCLUDE THE
FOLLOWING:
•REVENUE
•COST AND EXPENSES
•NET INCOME OR NET LOSS
ELEMENTS OF INCOME STATEMENT

•REVENUES
•COST OF SALES AND EXPENSES
ELEMENTS OF INCOME STATEMENT
• REVENUES
SALES OR SERVICE INCOME – THESE ARE
REVENUES OR GROSS INCOME FROM SALE OF
COMPANY PRODUCTS AND SERVICES
OTHER INCOME – INCOME FROM SOURCES
OTHER THAN THE PRINCIPAL LINE OF ACTIVITY
ELEMENTS OF INCOME STATEMENT
•COST OF SALES AND EXPENSES
ACCUMULATED TOTAL OF ALL
COSTS USED TO CREATE A PRODUCT
OR SERVICE
ELEMENTS OF INCOME STATEMENT
•COST OF SALES AND EXPENSES
THIS INCLUDES:
COST OF SALES TRANSPORTATION EXPENSE
SALARIES EXPENSE DEPRECIATION EXPENSE
UTILITIES EXPENSE REPRESENTATION EXPENSE
RENT EXPENSE
INTEREST EXPENSE
SUPPLIES EXPENSE
FORMS OF INCOME
STATEMENT
SINGLE STEP APPROACH INCOME
STATEMENT
ARRANGES ALL INCOME ACCOUNT IN
ONE GROUP AND EXPENSE
ACCOUNTS IN ANOTHER GROUP

All revenues – All Expenses = Net Income/Net


Loss
SINGLE STEP APPROACH INCOME
STATEMENT
ARRANGES ALL INCOME ACCOUNT IN
ONE GROUP AND EXPENSE
ACCOUNTS IN ANOTHER GROUP
MULTISTEP APPROACH
INCOME STATEMENT

CLEARLY SHOWS SPECIFIC INCOME,


COSTS, AND EXPENSES IN A SERIES OF
ARITHMETIC OPERATIONS.
MULTISTEP APPROACH INCOME STATEMENT
Distribution
Net Sales Expense Total Income
- Cost of Sales + Administrative - Operating
Expense Expense
= Gross Profit + Other Expense
+ Other Income = Net
+ Finance Costs Income/Net
= Total Income = Operating Loss
Expenses
THE FOLLOWING SELECTED ACCOUNTS
FROM AGNES CATERING SERVICES FOR
THE YEAR ENDED DECEMBER 31, 2018.
PREPARE AN INCOME STATEMENT OF
THE COMPANY. HINT: USE ONLY THE
ACCOUNTS INCLUDED IN THE INCOME
STATEMENT.
Account Titles Amount
Advances to Employees P 8,000
Agnes, Capital 358,950
Agnes, Drawings 20,000
Allowance for Doubtful Accounts 2,500
Catering Service Income 788,000
Catering Supplies Expense 9,000
Depreciation Expense 41,500
Dividend Expense 7,500
Donations and Contributions Expense 12,000
Doubtful Account Expense 3,000
Account Titles Amount
Insurance Expense 18,500
Interest Expense 4,800
Interest Income 2,400
Miscellaneous Expense 4,000
Office Supplies Expense 6,800
Rent Expense 36,000
Repair and Maintenance Expense 12,700
Representation and Entertainment Expense 11,000
Salaries Expense 57,200
Utilities Expense 35,000

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