San Antonio National High School

Lesson 2. Income
Statement
or
Statement of
Performance
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Prepared by: Ma’am Carleen A. Zapata

 1 First Floor 6 Sixth Floor
Introduction - To edit this slide: 6.1 This is your Title One

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6.2 This is your Title Two

2 Second Floor 7 Seventh Floor

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5 6 3 Third Floor 8 Eighth Floor

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4 Fourth Floor
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9 Ninth Floor
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5 Fifth Floor 10 Tenth Floor

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5.1 This is your Title One 10.1 This is your Title One
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 Introduction 1
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Financial Statements are prepared as end results
of the accounting process. The Cost of Goods Sold
are computed in the periodic inventory system to
determine the cost of goods that were sold during
the year. In recording a periodic inventory system in
merchandising business, the cost of goods sold
must be computed to proceed on the next financial
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statement reports.
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 Statement of Performance
also known as Income Statement
is a financial statement showing the
details of the revenue, expenses, net
income or net loss of operations in each
period.
Accounting values shown in the income
statement are called “nominal
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accounts”.
 Nominal Account or
Temporary Account
These accounts represent used, consumed,
or expired values, and earned revenues.
They are income and expenses accounts.
However, some accounts under
merchandising businesses are entirely
different from those used under service
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concerns.
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3.1 3.2
CHARLES JANE
DICKENS AUSTEN
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 Sales
represents the gross sales amount,
reduced by Sales Returns &
Allowances and Sales Discounts,
to arrive at Net Sales.
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 Cost of Sales (COGS)
schedule presents the accounts that
determine the cost of the goods that
were offered for sale during the year,
or the goods available for sale; as well
as the cost of the goods that were
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eventually sold.
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4.1 4.2
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 Net Profit or Net Income
the results when revenue exceeds
expenses.
Net Loss
is when expenses exceed the income
or total revenue produced for a given
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period.
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 ● Note: You can find out the profit of the
business by subtracting the total expenses
from the total income (Total Income – Total
Expenses = Profit).
● If the income is more than the expenses,
NET INCOME or NET PROFIT results. On the
contrary, if the total expense is more than
the total income, NET LOSS will be the
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declaration.
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 Lesson 3. Statement of Owner’s Equity
alternatively called “Capital Statement”

-is a summary of the transactions

affecting the capital account balance. It
starts with the beginning capital followed
by the possible changes in the owner’s
equity
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 *Refer to the Statement of Owner’s
Equity for the Net Profit/Net Loss.
Increases: (Add)
a. Net Income
b. Additional Investment

Decreases: (Less)
a. Net Loss for the period and/or
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b. Withdrawals
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If Net Income:
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 Statement of Performance or
Income statement
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If Net Loss:
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 PETA No. 2 Below are the selected accounts from the Trial Balance of Hailie and Ryleigh
Merchandising Company for the period ended, December 31, 2023. Compute the Cost of
Goods sold, then the Net Profit/Loss and Prepare Statement of Performance.
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 Quiz No. 2

Direction: Encircle the letter of the correct answer.

1. A merchandising company’s result of operation is a loss if:

A. Cost of Sales exceeds operating expenses
B. Expense exceeds the revenue
C. Net sales exceeds gross profit
D. Revenue exceeds expenses
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 2. A Financial statement showing details of
the revenue, expenses, net income or net
loss of operation in a given period.

A. Cost of Goods Sold

B. Statement of Financial Position
C. Statement of Owner’s Equity
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D. Statement of Performance
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9.1 9.2
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 3. A Financial statement showing the
summary of transaction affecting the
capital account balance.

A. Cost of Goods Sold

B. Statement of Financial Position
C. Statement of Owner’s Equity
D. Statement of Performance
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 4. Net Sales – Cost of Goods Sold –
Operating Expenses is equal to

A. Gross Profit
B. Gross Sales
C. Net Income/Loss
D. Net Sales
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 5. If the result of income is loss what would be the
computation for capital statement.

A. Add the income to the capital balance and the drawing

B. Add the income to the capital balance and subtract the
drawing
C. Subtract the income to the capital balance and the
drawing
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D. Subtract the income to the capital balance and add the

drawing
 Let’s Check on Thursday!
Have a blessed holiday!
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Thank you!
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