Accrual basis principle: According to this principle of accounting, revenue should be recognized at the time when it is earned, doesn’t matter, it is received or not, and expense should be recognized when it is incurred, doesn’t matter it is paid or not. Income Statement: The income statement is that financial statement which shows the net income (or loss) of the Company. In the income statement, all expenses incurred by the Company are deducted from the total revenue of the Company, to calculate the net income. To prepare: (a) Correct income statement for the quarter ended March 31, 2015. (b) Explain accounting principles which were not recognize by B at the time of preparing income statement.

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Chapter 3, Problem 3.6BYP

To determine

Accrual basis principle: According to this principle of accounting, revenue should be recognized at the time when it is earned, doesn’t matter, it is received or not, and expense should be recognized when it is incurred, doesn’t matter it is paid or not.

Income Statement: The income statement is that financial statement which shows the net income (or loss) of the Company. In the income statement, all expenses incurred by the Company are deducted from the total revenue of the Company, to calculate the net income.

To prepare: (a) Correct income statement for the quarter ended March 31, 2015.

(b) Explain accounting principles which were not recognize by B at the time of preparing income statement.

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