Income Statement

Income Statement The income statement reports a company’s income or loss for a specific period.  It lists revenues and subtracts from them the period’s expenses. A positive balance results in an income and a negative balance indicates a loss.  In the example below revenues of $6,000 minus expenses of $3,000 results in a net income of $3,000. This figure is used in the Statement of Owner’s Equity Your Business Name  Income Statement For Month Ended June 30, 20XX Revenues Net sales…

Statement of Owner’s Equity Example

Statement of Owner’s Equity The Statement of Owner’s Equity shows the change in owner’s equity during a given time period. It lists the owner equity balance at the beginning of the period, additions and subtractions to the balance, and the ending balance. Additions come from owner investments and income; subtractions from owner withdrawals and losses. Your Company Name Statement of Owner’s Equity For Month Ended June 30, 20XX Joe Smith, capital, June 1, 20XX $10,000.00 Investment during the month 1,000.00…

Accrual versus Cash Basis Accounting

Accrual versus Cash Basis Accounting

Accrual versus Cash-Basis AccountingContents1 Accrual versus Cash-Basis Accounting1.1 Cash Basis vs Accrual1.1.1 Accrual Example1.1.2 Cash-basis Example There are two ways companies can keep their accounting books: Cash Basis vs Accrual Cash-Basis The accrual basis is used by most companies; only very small businesses use cash-basis. Accrual Under the accrual method, expenses and revenue are recognized in the period they occur regardless of whether a cash transaction has occurred. For example, if a sale is made in January but payment is…

Inventory Systems

Accounting Examples - Inventory Systems

Inventory Systems – Perpetual and PeriodicContents1 Inventory Systems – Perpetual and Periodic1.1 The Perpetual System1.2 The Periodic System There are two systems companies use to maintain inventory records Perpetual The perpetual system is used by most companies especially now that computerized record-keeping systems that tie inventory and sales together are widely available. Periodic The periodic system is generally used by small businesses that have minimal inventories. As shown in the examples given later, the accounts used and the accounting entries…