Preparing the basic Income statement and statement of retained earnings.

Total expenses

is the sum of all money that was paid out by the company.

Financial Statements

Are a set of four reports generated at the end of the accounting cycle.

Statement Formula

Beginning Retained Earnings + Net Income (or - Net Loss) - Dividend and/ or owner's withdrawals = Ending Retained Earnings

Income statement

Is the financial report that tells whether or not a company made or lost money in a given time period.

Total Revenue

Is the sum of all the money that has been brought into a company in an accounting period.

Net income

Occurs if total revenue exceeds total expenses.

Net loss

Occurs when the total expenses are more than total revenue.

Retained earnings

Refers to the amount of net income that is left in a company after dividends have been paid to shareholders, if there are any, and after the owner has withdrawn money for himself.

Statement of Retained Earnings

Tells how much money that a company made was retained and reinvested in the company.

Income statement formula

Total Revenue - Total Expenses = Net Income or Net Loss