Preparing The Income Statement

Question 1

What are the six types of accounts?

Answer 1

Assets, liabilities, equity, revenue, expenses, dividends

Question 2

What are the two types of liabilities and assets?

Answer 2

Current & long term assets/liabilities

Question 3

What should be the first step in preparing an income statement?

Answer 3

Identify all the category each account belongs to

(e.g. SE, ÇA, LTA, CL, LTL, Exp, Rev)

Question 4

What accounts are represented on the income statement?

Answer 4

Revenue & expenses

Question 5

What are the 3 lines in an accounting title?

Answer 5

1st line- the company name

2nd line- the name of the financial statementstatement

3rd line- date

Question 6

What type of date is shown on the income statement?

Answer 6

A time period (e.g. for the year ended 31/12/22)

Can be monthly, quarterly or yearly

Because income statement shows rev&exp over a period of time

Question 7

How is an income statement formatted?

Answer 7

Revenues are listed

Expenses are then listed

Calculate revenue - expenses

Show profit/loss (net income)