Practice Making Income Statement

The income statement also called a profit and loss statement is one of the major financial statements issued by businesses along with the balance sheet and cash flow statement.

Practice making income statement. Green as at 31 march 2015. 100 000 x 12 x 1 12 1 000. The income statement must report the interest incurred regardless of the date the interest is paid. The following trial balance is prepared after preparation of income statement for f.

The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non operating activities this statement is one of three statements used in both corporate finance including financial modeling and accounting. Income statements show how much profit a business generated during a specific reporting period and the amount of expenses incurred while earning revenue. Green as at 31 march 2015 in both horizontal and vertical style. The income statement format above is a basic one what is known as a single step income statement meaning just one category of income and one category of expenses and prepared specifically for a service business.

The income statement and balance sheet. Single step income statement. As you can see this example income statement is a single step statement because it only lists expenses in one main category. The income statement and balance sheet accounting.

The income statement profit and loss report and the balance sheet these reports show a company s financial make up its profitability and summarize the values of the accounts in the. Examples of service businesses are medical accounting or legal practices or a business that provides services such as plumbing cleaning consulting design etc. When you have completed the practice exam a. Preparation of balance sheet horizontal and vertical style.

Explaining the components of the income statement and the retained earnings statement. The income statement is one of a company s core financial statements that shows their profit and loss over a period of time. It s standard practice to show three accounting periods on an income statement so the following example lists three months worth of figures but only shows actual numbers for one month. A multi step income statement contains four measures of profitability and a single step income statement contains one measure of profitability.

After you calculate net sales and cost of goods sold you can use the rest of the numbers from your worksheet to prepare your business s income statement. Prepare balance sheet for f. In the absence of information about the date of repayment of a liability then it may be assumed. Is a retailer s interest expense an operating expense or a non operating expense.

This tutorial focuses on the two most important financial reports in accounting.