ws. The company uses a reporting period that differs from the calendar. Called a fiscal year, reporting period can cover any twelve-month period desired by the company's owners and hagers. Because Plumb Happy's slowest business activity occurs in September and ober, the Journeys selected October 1 through September 30 as the company's fiscal r. Picking this time period allows company employees to focus on the accounting records at me when they are less distracted by high customer demands and interruptions. The financial ments presented below utilize the September 30 fiscal year-end. The Income Statement ears first. Income Statement Plumb Happy Income Statement For the fiscal year ended September 30, 2027 $1,592,430 762,200 $ 830,230 ncrease SE Sales and Labor Revenue Cost of Goods Sold Gross Profit Operating Expenses: Salary Expense Depreciation Expense Тax Expense Insurance Expense Office Expense Miscellaneous Expense Total Expenses Deesease $337,425 44,500 30,200 22,000 3,050 9,730 SE 446.905 S 383,325 Operating Income Nother Expense: 11,900 S 371,425 144,800 S 226,625 Interest Expense (ShoudSE Net Income Before Taxes Income Taxes Net Income why are aul tolals On the CR Sida The Income Statement, as well as the following statements, has the name of ny on the first line and the name of the statement on the second line of the heading.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
I have attached the Income Statement I will be referring to. Please explain and clarify
1) What account does Cost of Goods Sold go under and what is its balance?
2) How do you get your Gross Profit
3) Do you always subtract Total Expenses from Gross Profit to get your Operating Income?
4) What account does Interest Expense go and what balance does it carry?
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