Summary Accounting - Financial statements

FINANCIAL STATEMENTS:


THE INCOME STATEMENT;
 Indicates the businesses incomes and expenses.
 Also known as the statement of comprehensive income.
 This is where the business can determine whether or not they made a profit or
loss for the financial year.

INCOME STATEMENT / STATEMENT OF COMPREHENSIVE INCOME:
Sales
-Cost of sales ( )
= GROSS PROFIT
+ other operating income
Rent income
Discount received
Bad debts recovered
Commission income
Fee income
Donations
Trading stock surplus
Bad debts recovered (if it is reduced)
Profit on sale of asset
*note that there is no limit anything that is an
income will be shown here
= GROSS OPERATING INCOME

-Operating expenses ( )
Salaries and wages
Telephone
Packing material
Water and electricity
Advertising
Insurance
Rent expense
Rates and expenses
Packaging material
Consumable goods
Depreciation
Bad debts
Loss on sale of asset
Provision for bad debts (when increased)
*note that there is no limit; all expenses will be
shown here.
=OPERATING PROFIT (LOSS)
+ Interest income 1
=Profit before interest expense
-Interest expenses 2 ( )
= NET PROFIT (LOSS) FOR THE YEAR

, INCOME STATEMENT NOTES:

1. INTEREST INCOME
Interest on fixed deposit / investment
Interest on current account
Interest on savings account
Interest on overdue debtors




2. INTEREST EXPENSES
Interest on loan
Interest on mortgage loan
Interest on overdue creditors
Interest on overdraft




THE BALANCE SHEET: