Income Statement
Shows results of business operations over time (typically 1 year). Shows profit or loss.
Statement of Owner’s Equity
Reports the end-of-period balance in the owner’s equity account
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Income Statement
Shows results of business operations over time (typically 1 year). Shows profit or loss.
Statement of Owner’s Equity
Reports the end-of-period balance in the owner’s equity account
Three-Line Heading Format
Business Name
Statement Title (e.g., Balance Sheet)
Date or Period Covered
Formatting Rules for Financial Data
All numbers start in the far-right column
Sub-calculations shift one column left
Single underline = end of a subtotal
Double underline = final figure (e.g., net income or totals
Final Results That MUST Be Double-Underlined:
Net Income
Owner’s Equity
End-of-Period Balances
Total Assets
Total Liabilities + Owner’s Equity
Memory Hook:
“Name. Title. Time. Right, Left, Underline, Double Sign.”
This reminds you:
Use the 3-line header: Name, Title, Time
Numbers go from Right → Left (subtotals)
Use Underline for subtotals
Use Double Underline for Net/Finals
Activity-Based Costing (ABC)
Aligns business activities (like production or delivery) with their actual costs.
All statements are interconnected through these common components:
Inventory – Products available for sale (not services!)
Income & Expenses – Revenue earned and bills paid
Cost of Goods Sold (COGS) – Only applies to product-based businesses, not services
Net Income – The final profit line; if this is missing, your business is in trouble
The Accumulated Depreciation account should be shown in the financial statements as:
A contra (deduction) to an asset account
Which of the following will be credited when recording an accrued expense?
A liability account
Sole Proprietor
One owner, unincorporated, full control/liability.
Partnership
Two or more people/businesses sharing control and liability.
Corporation
Legally separate entity, governed by state law, sells stock, heavy regulation.