1 / 17

What are the three main parts of the Income Statement?

What are the three main parts of the Income Statement?. Revenue Cost of Merchandise Sold Expenses. Sales -Sales Discount -Sales Ret. And Allowances. How do you calculate Net Sales? . How do you calculate Cost of Merchandise Sold?.

seda
Download Presentation

What are the three main parts of the Income Statement?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. What are the three main parts of the Income Statement? • Revenue • Cost of Merchandise Sold • Expenses

  2. Sales -Sales Discount -Sales Ret. And Allowances How do you calculate Net Sales?

  3. How do you calculate Cost of Merchandise Sold? Beginning Merchandise Inventory (trial balance of worksheet) + Net Purchases Purchases -(Purchases Discount + Purchases Ret. And Allow.) =Cost of Merchandise Avail for Sale -Ending Merch. Inventory (balance sheet of worksheet) =Cost of Merchandise Sold

  4. What is the purpose of the Income Statement? • To show the net income • To compare the current fiscal period with previous • To compare the company with other similar companies

  5. How can you compare the Income Statement of one corporation with that of another? • Component Percentages

  6. How are component percentages calculated? • Category totals are divided by the new sales.

  7. Should the acceptable component percentages for every corporation be the same? • No • Why??

  8. If the acceptable component percentage for Cost of Merchandise is not more than 45% is 49% acceptable? • No • What recommendations would you give?

  9. What is the price-earnings ratio for a corporation? • Market price per share divided by net earnings per share.

  10. Should the price-earnings ratio be high or low? • Low • The lower this ratio is the higher the earnings per share is • This reflects that the company is doing well

  11. What are the sections of the Statement of Stockholders’ Equity? • Capital Stock • Retained Earnings

  12. How is capital stock calculated? Par value of stock X Number of shares issued

  13. How is Retained Earnings calculated? Balance on January 1 of current year + Net Income after Fed. Taxes - Dividends Declared for the year Net Increase in retained earnings Retained Earnings on December 31

  14. What are the main sections of the Balance Sheet? • Assets • Current • Plant • Liabilities • Stockholders Equity • Capital Stock • Retained Earnings

  15. A value assigned to a share of stock is called? • Par Value

  16. How do you arrive at the Accounts Receivable amount on the Balance Sheet? Accts. Rec. -Allowance for Uncollectible Accounts

  17. How do you arrive at the Office Equipment amount used on the Balance Sheet? Office Equipment - Accumulated Depreciation for Off. Equip.

More Related