Chapter 1, Problem 5EYCT

(a)

To determine

Income Statement: A part of financial statements that lists the income and expenses of business for an accounting year is called income statement. It is prepared at the end of accounting period to know the profitability of a business.

Balance Sheet: A part of financial statements that lists the assets, liabilities and stockholders’ equity in the business during an accounting period is called balance sheet.

To Identify: The method used to determine loss of $6,100 and whether it is valid.

(b)

To determine

To identify: The method used to determine profit of $2,480 and whether it is valid.

(c)

To determine

Actual net income without preparing income statement.

(d)

To determine

The revenue recognized in March.