Financial statements - Income statement

Question 1

definition of income statement

Answer 1

a report comparing wealth generated (revenues) to wealth consumed (expenses)

Question 2

Net income/loss equation

Answer 2

Revenues - expenses = net income/net loss

Question 3

Revenue is accounted for in the period in which it is _______

Answer 3

earned

Question 4

Revenue is accounted for _______________ of whether you actually received the cash

Answer 4

INDEPENDENTLY - cash could be tied up in accounts receivable

Question 5

Expenses are accounted for in the period in which they are _______________

Answer 5

INCURRED (rather than the period they are are PAID)

Question 6

Accrual accounting attempts to create _________________

Answer 6

a stable portrayal of income by emphasizing the time interval

Question 7

example of income statement sheet

Answer 7

Revenue - Expenses = net income(net loss)

Revenues:
Salary: $3000
Investment income: $1000
Total revenues $4000
Expenses:
Payroll and income taxes $2000
Food and clothing $500
Rent $500
Other expenses $500
Total expenses $3500

Net income $500