CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 7-1LESSON 7-1

Preparing an Income Statement

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 7-1

HEADING OF AN INCOME STATEMENTHEADING OF AN INCOME STATEMENT

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page 182

1. Center the name of the company on the first line.

2. Center the name of the report on the second line.

3. Center the date of the report on the third line.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 7-1

REVENUE, EXPENSES, AND NET INCOME REVENUE, EXPENSES, AND NET INCOME SECTIONS OF AN INCOME STATEMENTSECTIONS OF AN INCOME STATEMENT page 183

11RevenueRevenue33 Revenue amountRevenue amount

44ExpensesExpenses

55Account titlesAccount titles 66 Expense amountExpense amount

88Total expensesTotal expenses 99 Total of expensesTotal of expenses

1212 Net IncomeNet Income

77 Single lineSingle line

1111 Single lineSingle line

1010 Calculate net incomeCalculate net income

1414 Double linesDouble lines

1313 Record net incomeRecord net income

22 Account titleAccount title

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 7-1

COMPONENT PERCENTAGE ANALYSIS COMPONENT PERCENTAGE ANALYSIS OF AN INCOME STATEMENTOF AN INCOME STATEMENT page 184

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 7-1

INCOME STATEMENT WITH TWO SOURCES OF INCOME STATEMENT WITH TWO SOURCES OF REVENUE AND A NET LOSSREVENUE AND A NET LOSS page 185

11RevenueRevenue

33 Revenue amountsRevenue amounts22Account titlesAccount titles

66Net LossNet Loss

77 Record Net LossRecord Net Loss

55 Total RevenueTotal Revenue

44 Total of revenueTotal of revenue

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 7-1

TERMS REVIEW & CONCEPTSTERMS REVIEW & CONCEPTS

CONCEPTS Adequate Disclosure is applied when financial statements

contain all information necessary to understand a business's financial condition.

Going Concern is applied when financial statements are prepared with the expectation that a business will remain in operation indefinitely.

Stakeholders - - Any persons or group who will affected by an action.

Component Percentage - - The percentage relationship between one financial statement item and the total that includes

that item.

page 186

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 7-2LESSON 7-2

Balance Sheet Information on a Work Sheet

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 7-2

HEADING OF A BALANCE SHEETHEADING OF A BALANCE SHEET page 187

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1. Center the name of the company on the first line.

2. Center the name of the report on the second line.

3. Center the date of the report on the third line.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 7-2

ASSETS AND LIABILITIES ASSETS AND LIABILITIES SECTIONS OF A BALANCE SHEETSECTIONS OF A BALANCE SHEET page 188

44 LiabilitiesLiabilities11 AssetsAssets

Total LiabilitiesTotal Liabilities88

22 Account titles Account titles

33 Asset amountsAsset amounts

Single lineSingle line 77

66Liability amountsLiability amounts

55Account titlesAccount titles

Total of liabilitiesTotal of liabilities 99

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 7-2

OWNER’S EQUITY SECTION OF A OWNER’S EQUITY SECTION OF A BALANCE SHEETBALANCE SHEET page 189

77 Total Liab. and Owner’s Eq.Total Liab. and Owner’s Eq.

55 Total AssetsTotal Assets

11 Owner’s EquityOwner’s Equity

22 Account title Account title 33Capital amountCapital amount

44 Single lineSingle line

66Total of assetsTotal of assets

88Total of Liabilities and Owner’s EquityTotal of Liabilities and Owner’s Equity

99Compare totalsCompare totals 1010 Double linesDouble lines

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 7-2

OWNER’S EQUITY REPORTED IN DETAIL OWNER’S EQUITY REPORTED IN DETAIL ON A BALANCE SHEETON A BALANCE SHEET page 190

22Beginning capital amountBeginning capital amount

66DifferenceDifference

88Current capital amountCurrent capital amount

11 Beginning capitalBeginning capital

33 Net IncomeNet Income

44 DrawingDrawing

Ending capitalEnding capital77

99 Total Liabilities and Owner’s EquityTotal Liabilities and Owner’s Equity

55 Single lineSingle line

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning