Income statement presentation @ DOMS

1. FINANCIAL ACCOUNTING BASICS

6. J. INCOME STATEMENT (cont) Cash Retained Earnings Expenses Revenues Inventory Accounts Receivable 2,500 2,500 Begin 8,000 2,000 2,000 4,000 5,000 5,000 4,000 End 2,000 6,000 6,000 6,000 7,500 7,500 7,500 0 0 Transaction 4: On January 9, ABC Company sells inventory that cost $2,000 for $2,500 in cash. Transaction 6: On January 12, ABC Company sells inventory that cost $4,000 for $5,000, on account. 1,500

7. K. INCOME STATEMENT PRESENTATION Note that the income statement presents several measures of profit/income: (1) gross profit, (2) operating income, (3) income before taxes, and (4) net income. The next slide describes the classification of expenses.

11. M. JOURNAL AND LEDGER (cont) Journal Date Accounts Debit (Dr.) Credit (Cr.) Jan. 2 Cash Paid-in Capital 10,000 10,000 3 Cash Notes Payable 5,000 5,000 4 Inventory Accounts Payable 8,000 8,000 9 Cash Revenues 2,500 2,500 Expenses Inventory 2,000 2,000 10 Accounts Payable Cash 8,000 8,000 12 Accounts Receivable Revenues 5,000 5,000 Expenses Inventory 4,000 4,000 31 Cash Accounts Receivable 5,000 5,000

13. M. JOURNAL AND LEDGER (cont) Ledger Account Title Cash Account Number 101 Account Title Paid-in Capital Account Number 301 Date Explanation Debit Credit Balance Jan. 2 Investment by owners 10,000 10,000 3 Borrowing from bank 5,000 15,000 9 Sale of goods 2,500 17,500 10 Payment of suppliers 8,000 9,500 31 Collection from customers 5,000 14,500 Date Explanation Debit Credit Balance Jan. 2 Investment by owners 10,000 10,000