Income Statement

Question 1

Revenue

Answer 1

Total amount earned by a business by selling/performing goods/service

Question 2

Account name for revenue

Answer 2

Earnings

Question 3

Expenses

Answer 3

Cost of g/s used up in the routine operation of business

Question 4

Business definition

Answer 4

Makes money

1. Provide a g/s
2. Satisfy customer
3. Make profit

Question 5

Primary Revenue

Answer 5

Main source of income from business

Question 6

Secondary Revenue

Answer 6

Secondary source of income

Question 7

Net Income

Answer 7

Difference in value between revenue and expense but revenue is bigger

Question 8

Net Loss

Answer 8

Difference in value between revenue and expense but expense is bigger

Question 9

Net Income vs Net profit

Answer 9

Income = service
Profit = merchandising

Question 10

Income Statement Equation

Answer 10

R - E = Net income/Loss

Question 11

Income Statement Format

Answer 11

Presents revenue, expenses, and Net Income over a period of time

Question 12

Accounting Period

Answer 12

Time frame used for financial reporting

Question 13

Why do we separate earnings, expenses, drawing?

Answer 13

To show people in depth the finances of a business

Question 14

Drawings

Answer 14

Withdrawal of funds/assets by owner of business. Use for paying yourself

Question 15

Expenses and Revenue and Drawings only increase or decrease?

Answer 15

Increase

Question 16

Why do you add name in Capital/Drawings

Answer 16

If you have a partnership business, you will need to create two of the same accounts with the two people to track the two different transactions they are making

Question 17

What can decrease owner’s equity

Answer 17

Withdrawal of cash for personal use
Removing merchandise for personal use
Taking equipment from business for personal use
Using company’s assets for personal use

Question 18

What is Accural Basis Accounting?

Answer 18

Not GAAP but an accounting method; records revenue and expenses when service has been performed and when expenses get demanded

Question 19

What is Time Period Principale?

Answer 19

Record financial statemtens within time periods; defines the accounting period; GAAP

Question 20

What is Matching Principale?

Answer 20

Expenses should be recorded to match with revenue; GAAP

Question 21

What is Revenue Recognizition Principale?

Answer 21

Revenue is recorded when it’s earned; when you perform service; GAAP

Question 22

What are two GAAPs that make up Accural Basis Accounting?

Answer 22

Matching and Revenue Recognition Principale

Question 23

What is the Expanded Ledger Equation?

Answer 23

Begainning Captial +/- Net Income/Net Loss - Drawings = Ending Captial