Preparing An Income Statement
Net purchases formula
purchases - purchase returns and allowances - purchase discounts
Sections Of Income Statement
revenue, cost of merchandise sold, operating expenses, other revenue(income not earned from day to day operations)
Net Sales Formula
sales revenue - sales discounts - sales returns and allowances
income from operations
the operating revenue remaining after the cost of merchandise sold and operating expenses has been deducted
cost of merchandise sold
the original price of all merchandise sold during a fiscal period
Cost of Merchandise sold formula
Beginning merchandise inventory + net purchases= total cost of merchandise available for sale. Total cost of merchandise available for sale- Ending inventory= cost of merchandise sold
Gross profit formula
Net Sales - Cost of Merchandise Sold
net sales
The amount of sales, less sales discounts and sales returns and allowances.
operating expenses
The expenses incurred by a business in its normal operations.
Gross Profit
The operating revenue remaining after cost of merchandise sold has been deducted.
Operating Revenue
The revenue earned by a business from its normal business operations.
statement of stockholders' equity
a financial statement that shows changes in a corporation's ownership for a fiscal period
par value
a value assigned to a share of stock and printed on the stock certificate. Value of shares=par value* Shares issued
retained earnings
cumulative net earnings or profits a business has after accounting for dividend payments
