Income statements

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Income statements

  1. 1. IN C O M ES TA TE M E N TS A g B u s in e s s Ma na g e me ntOriginal PowerPoint Created by S p r i n g 19 9 9 Mike White Modified byGeorgia Agricultural Education Curriculum Office June, 2002
  2. 2. How do you measure performance?a Your school worka Basketball teama Restauranta Greenhouse
  3. 3. Objectivesa Describe the importance of income statements.a Identify sources of revenue and expenses.a Given a list of transactions, categorize revenues and expenses.
  4. 4. Importance of an Income Statementa Did the business end the year with a profit or loss?a How much was the profit/loss?
  5. 5. Uses of Income Statementa Summarize revenues & expensesa Determine profit/lossa Explain changes in owner equity
  6. 6. Uses of Income Statementa Calculate financial measuresa Support loan application
  7. 7. Summary of Revenue & Expensesa Revenue = cash receipts from product sales or dividends on interest income. • Short or long term asset sales • Inventory adjustments
  8. 8. Examples of Revenuesa Cash Revenues • Cash sales • Government payments • Custom work receipts
  9. 9. Examples of Revenuesa Non-cash Revenues • Acct. Receivable • Changes in inventory
  10. 10. Summary of Revenue & Expensesa Expenses • operating • interest • non-cash expense adjustment
  11. 11. Examples of Expensesa Cash operating • seed • fertilizer • chemicals
  12. 12. Examples of Expensesa Non-cash expenses • depreciation • changes in unused supp., acct. pay., accrued int., accrued taxes
  13. 13. Net Incomea Net income = revenue - expenses • Net income calculated annually • Corresponds with income tax reporting dates
  14. 14. Cash Accounting - Income St.cash revenue - cash expenses = net cash income
  15. 15. Cash Accounting - Income St.net cash income - depreciation = net income from operations
  16. 16. Cash Accounting - Income St. net income from operation± gain/loss on sale of capital assets = net income
  17. 17. Accrual Accounting Income Statement gross revenue - cash expenses - depreciation± non-cash expense adjustment = net income from operation
  18. 18. Accrual Accounting Income Statement net income from operations± gain/loss on sale of capital assets = net income

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