Accounting: Preparing the Income Statement
Net income increases or decreases owner's equity?
increases
Time Period Principle
requires the definition and use of the same period of time for the accounting period
How are debit and credit balance sheet accounts determined by?
they balance each other
If the revenue is $24 500 and the expense are $28 000 what is the net loss?
$3500
If the revenue is $24 500 and the expense are $18 000 what is the net income?
$6500
Revenue
An inflow of assets from customers, earned from the sales of goods or services
Fiscal Period
Another term for accounting period
Revenue accounts increase equity and revenue earned is recored in what account?
Credit in the revenue account
Expenses decreed quite and money spent on expense is recored in what account?
Debit int he expense account
Matching Principle
Expense should be recorded and matched with revenue generated during the same accounting period
Accrual Basis of Accounting
Requires that revenues be recored when earned and expense when incurred
Cash Basis of Accounting
Requites that expense be recored only when they are paid for and the revenue be recored only when cash is received
Expenses
The cost of goods and services used by a company to bring in revenue
Income Statement
The name of the statement that prevents the revenue, expense, and net income (or net loss)
Accounting Period
The period of time covered by the financial statements
Balance Sheet
The statement hat presents the assets, liabilities , and owner's equity
Calendar Year
The twelfth month period from January 1 to December 31
Net Loss
When expenses are greater than revenues
Net Income
When revenue is grater than expenses
What are liabilities and capital increase on?
credit side
Which side does an asset decrease on?
credit side
What are liabilities and capital decrease on?
debit side
Which side does an asset increase on?
debit side
Net loss increases or decreases owner's equity?
decreases