THREE BASIC FINANCIAL

STATEMENTS
AGMGT 2115
 FINANCIAL STATEMENTS

Income
Statement
Statement of
Owner’s
Equity
Balance Sheet
 INCOME STATEMENT

o It shows the results of operation of Income Statement for Service Type Business
the business at a certain period of
time or accounting period.
o Income statement presents the
Income Statement for Merchandising Business
money left (profit) after deducting all
the expenses from the revenues
incurred.
Income Statement for Manufacturing Business
 INCOME STATEMENT

A. Service Type Business B. Merchandising Business C. Manufacturing Business

Name of Business Name of Business Name of Business

Income Statement Income Statement Income Statement
Period Covered Period Covered Period Covered

Revenues ______ Revenues ______ Revenues ______

Less: ______ Less: ______
Less: ______ Cost of goods sold Cost of goods sold
Operating Expenses Equals: Gross Profit ______ Equals: Gross Profit ______
Less: ______ Less:
Equals: Operating expenses Operating Expenses ______
Net Income ______ Equals: Equals:
Net Income ______ Net Income ______
 INCOME STATEMENT

Merchandising Business Manufacturing Business

Name of Business Name of Business
Income Statement Income Statement
Period Covered Period Covered Cost of Goods
Net Purchases is Manufactured is
considered Revenues ______ Revenues ______ considered
Less: ______ Less: ______
Cost of goods sold Cost of goods sold
Equals: Gross Profit ______ Equals: Gross Profit ______
Less: ______ Less:
Operating expenses Operating Expenses ______
Equals: Equals:
Net Income ______ Net Income ______
INCOME STATEMENT: EXAMPLE
The following are the revenues and expenses Ars Wedding Organizer
Income Statement
incurred by the Ars Wedding Organizer at the For the month ended October 31, 2018
end of the accounting period on October Revenues:
31,2018. Prepare for a simple Income Consulting Revenue 67,700
Statement: Referral Revenue 4, 000
71,700
Consulting Revenue 67,700 Less: Operating Expenses
Referral Revenue 4, 000 Salaries Expense 15,600
Utilities Expense 4,400
Salaries Expense 15,600 Rent Expense 4,000
Utilities Expense 4,400 Depreciation expense-vehicle 4,000
Rent Expense 4,000 Interest Expense 3,500
Supplies Expense 1,200
Depreciation expense-vehicle 4,000 32,700
Interest Expense 3,500
Profit 39,000
Supplies Expense 1,200
 STATEMENT OF OWNER’S EQUITY

It shows the changes in the owner’s Name of Business

equity, wherein the net income Statement of Owner’s Equity
earned is added to (or a net loss is Period Covered
subtracted from ) the owner’s equity,
Owner’s Capital, Beginning ______
and withdrawals made by the owner,
Add: ______
is subtracted from the owner’s Net Income (Less if Net Loss)
capital of the business.
Less: ______
Withdrawals
Equals:
Owner’s Capital Ending ______
 STATEMENT OF OWNER’S EQUITY

Name of Business Ars Wedding Organizer

Statement of Owner’s Equity
Statement of Owner’s Equity
For the month ended October 31, 2018
Period Covered

Owner’s Capital, Beginning ______ Owner’s Capital, Beginning 250,000

Add: ______ Add: Net Income 39,000
Net Income (Less if Net Loss)
Total 289,000
Less: ______
Less: Withdrawals 14,000
Withdrawals
Equals: Equals: Owner’s Capital, Ending 275,000
Owner’s Capital Ending ______
 BALANCE SHEET

o Also known as Statement of Financial Name of Business

Position. It shows the assets owned, the Balance Sheet
debts owed from creditors and the Specific Date
capital invested in the business at a Assets: Liabilities:
specific dates. Current Assets Current Liabilities

o Balance sheet shows that the total Fixed Assets Fixed Liabilities
assets is equals to the total liabilities TOTAL ASSETS TOTAL LIABILITIES
and owner’s equity. Owner’s Capital
TOTAL OWNER’S EQUITY
TOTAL EQUITIES
 De Vera Storage Service USING THE ADJUSTED TRIAL BALANCE OF DE VERA
Adjusted Trial Balance STORAGE SERVICE, PREPARE THE THREE FINANCIAL
January 31, 2018 STATEMENTS
Cash 8,105
Storage fees receivable 3,850 De Vera Storage Service
Unexpired insurance 3,740 Income Statement
Office supplies 55 For the month ended January 31, 2018
Office equipment 7,200
A/D: Office Equipment 120 Revenues:
Note payable 3,000
Interest payable 45 Storage fees earned 13,820
Salaries payable 1,500 Less: Operating Expenses
Unearned storage fees 300 Rent expense 1,800
De Vera, Capital 11,795 Telephone expense 135
De Vera, Withdrawals 450
Storage fees earned 13,820 Salaries Expense 4,320
Rent expense 1,800 Insurance expense 340
Telephone expense 135 Office supplies expense 350
Salaries Expense 4,320 Interest expense 45
Insurance expense 340
Office supplies expense 350 Depreciation expense 120
Interest expense 45 Total Operating Expenses 7,110
Depreciation expense 120 ________
 30,510 30,510 NET INCOME 6,710
 De Vera Storage Service
Adjusted Trial Balance
January 31, 2018
De Vera Storage Service
Cash 8,105 Statement of Owner’s Equity
Storage fees receivable 3,850 For the month ended January 31, 2018
Unexpired insurance 3,740
Office supplies 55
Office equipment 7,200 De Vera, Capital 11,795
A/D: Office Equipment 120
Note payable 3,000 Add: Net Income 6,710
Interest payable 45
Salaries payable 1,500 Subtotal 18,505
Unearned storage fees 300
De Vera, Capital 11,795 Less: De Vera, Withdrawals 450
De Vera, Withdrawals 450
Storage fees earned 13,820 De Vera, Capital, ending 18,055
Rent expense 1,800
Telephone expense 135
Salaries Expense 4,320
Insurance expense 340
Office supplies expense 350
Interest expense 45
Depreciation expense 120 ________
 30,510 30,510
 De Vera Storage Service
Adjusted Trial Balance
January 31, 2018
Cash 8,105 De Vera Storage Service
Storage fees receivable 3,850 Balance Sheet
Unexpired insurance 3,740 As of January 31, 2018
Office supplies 55
Office equipment 7,200 Assets Liabilities
A/D: Office Equipment 120 Cash 8,105 Notes payable 3,000
Notes payable 3,000
Storage fees receivable 3,850 Salaries payable 1,500
Interest payable 45
Salaries payable 1,500 Unexpired insurance 3,740 Unearned storage fees 230
Unearned storage fees 300 Office supplies 55 TOTAL LIABILITIES 4,775
De Vera, Capital 11,795 Office equipment 7,080
De Vera, Withdrawals 450 TOTAL ASSETS 22,830
Storage fees earned 13,820
Rent expense 1,800 OWNER’S EQUITY
Telephone expense 135 De Vera, Capital 18,055
Salaries Expense 4,320
Insurance expense 340
Office supplies expense 350 TOTAL EQUITIES 22, 830
Interest expense 45
Depreciation expense 120 ________
 30,510 30,510