The document discusses balance sheets and calculating net income. A balance sheet shows assets on the debit side and owners' equity and liabilities on the credit side. There are three methods to calculate net income: sales minus cost of goods sold and expenses to determine gross profit, then subtracting non-manufacturing costs from gross profit. Non-manufacturing costs include marketing, selling, and administrative expenses. The net income is the gross profit minus the non-manufacturing costs.

2. Balance Sheet and Net Income

3. Balance Sheet Debit side. Credit side. =

4. Debit side: Assets: Fixed assets. Or ( Non financial assets ) Or ( PP&E ) Current assets. Or ( Financial assets ) Notes: Account receivable. Notes receivable.

6. Credit side : Owners Right. or Owners Equity. Liabilities. Notes: Account payable. Notes payable.

8. Net Income There are 3 methods of the net income… Elements: Sales. COGS ( Cost of sales ) Gross Profit or Contribution Margin. Manufacturing & non manufacturing costs . Net income.

9. COGS Cost of good sold. Cost of sales. BEG.inv. cost + production cost – End inv.Cost Gross Profit or Contribution Margin: = Sales – Cost of sales

10. Manufacturing & non manufacturing costs 1 ST : Manufacturing cost: Mark-up structure. Fixed cost: { Ex. The rent of the land or buildings, maintenance of the machines, insurance …etc } Variable cost: { Ex. Electric, water, materials, labor costs, property taxes ….etc }

11. 2 nd : Non manufacturing cost: Marketing & selling costs: Include advertising costs, shipping costs, sales commission and sales salary. Administrative costs: Include all executive and organizational costs associated with general management of an organization. Net Income = Gross profit – Non manufacturing cost

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