Income Statement Preparation

Question 1

a detailed report that shows all the income or earnings, expenses, and the resulting profits or losses of a business for a given accounting period

Answer 1

Income Statement

Question 2

are composed of people who are in charge of the business as well as the board of directors in big corporations. These people use the income statement to analyze the performance of the business and to be able to make effective decisions.

Answer 2

Internal users

Question 3

are composed of the investors and creditors of the business. These people are the outside forces in the business who are indirectly related to its operations.

Answer 3

External users

Question 4

Income Statement formula

Answer 4

Revenues - Expenses = Income or Profit (Loss)

Question 5

The approach to be taken in calculating this figure will depend on the accounting method adopted by the business and how it asseses its overall revenues

Answer 5

Gross Sales or Sales Revenue

Question 6

refers to the direct costs associated with producing all of the products and/or services sold by the business.

Answer 6

Cost of Goods Sold (COGS)

Question 7

derived from subtracting the total cost of goods sold from the sales revenue. This variable of the income statement manifests the profitability of the business after taking into account the direct costs incurred

Answer 7

Gross Profit or Margin

Question 8

mainlu include rent or lease, bank fees, equipment or machinery expenses, marketing and advertising expenses, and all other expenditures to keep the business going.

Answer 8

Operating Expenses

Question 9

refers to the residual income after deducting all expenses or costs of doing business, excluding deductions of interest and taxes

Answer 9

Operating Profit/Margin

Question 10

refers to the toal amount owed by the business to the Bureau of Internal Revenue (BIR), the taxing authority in

Answer 10

Taxes Due