Chapter 3 Test 1 Flashcards
Income Statement
Revenues or Sales
A measure of the assets received in exchange for goods sold and services rendered.
Cost of Goods Sold
the cost of products sold
Selling, General, and Administrative
costs incurred to sell products and services as well as costs of administration i.e. rent, salaries, salesforce
Research and Development Expense
costs incurred to create and develop new products, processes, and services,
Advertising Expense
costs incurred with the goal of increasing sales by attracting new customers or inducing existing customers to increase their purchases.
Interest Expense
the cost of using borrowed funds
Interest Income
income earned on amounts lent to others or from investments in interest yielding securities.
Income Tax Expense
federal, state, and local taxes levied on income.
net revenues are?
all revenues calculated on the income statement
expenses are
net assets outflows or going out.
Net Revenues - Expenses =
Net gain or net loss
How are income statement s linked with balance sheet?
Retained Earnings (begining bal Yr 6) + Net Income - Divdends =Retained Earnings (ending bal for next year)
Liabilities + Contr. Cap + Retained Earnings Beg Pr. + Rev - Exp - Div
= Assets
Net Income =
Retained Earnings at the end of period - Retained Earn. Beg Pd. + Div
The purpose of the income statement is
see the performance for the period and record all rev and expenses directly from the retained earnings
