Chapter 1, Problem 14E

To determine

Income Statement:

Income statement gives a detail representation of the revenues generated and the expenses incurred by the company in a fiscal year thereby concluding the company’s financial status. It is a financial statement which deals with operating and non-operating activities of the company.

Net Income:

Net income is the net revenue earned by the company after taking into account various charges, costs, expenses and deductions. The net income is crucial for the shareholders and gives an idea of profitability level of the company.

Cost of Goods Manufacture (COGM):

Cost of goods manufacture is the cost related with the goods which were being manufactured within a fiscal year. The following cost covers labor cost, unprocessed material used cost and any other support cost which helped to reshape the unfinished into end goods or materials which have entered the production process thus have consumed of reasonable cost.

Cost of Goods Sold (COGS):

Cost of goods sold is the total expense or the cost incurred by the business during the process of manufacturing of goods and is directly related to the production. It generally includes the cost of material, labor and other manufacturing support costs.

Cost of Goods Available for Sale

It basically includes the cost of inventory which is ready for sale within an accounting period. It mainly includes the cost of beginning inventory as well as the stock purchased in that year and the production within that period (if any).

Operating Expenses:

The costs incurred in the day to day operations to continue with the business though not related directly with the production of goods are termed as operating expenses.

To compute: Prepare income statement.