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Lecture

Income Statement - Detailed.docx

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Department
Administrative Studies
Course
ADMS 1500
Professor
Paul Evans
Semester
Summer

Description
ABC Company Income Statement for First Year Ended December 31, 2012 Revenues Add: 1. Sales a. Cash b. Credit 2. Accounts Receivable 3. Interest from bank deposit 4. Rent 5. Commission Less 1. Discounts 2. Credit Card Fees [Total Revenue => Sales + Interest on Bank Deposit + Rent + Commission – (Discounts + Credit card fees) ] Expenses Less 1. Cost of Goods Sold: [hint: Goods have to materialistic for example clothes, not for services companies] a. Step 1: Opening Inventory + Purchases = Goods Available for sale b. Step 2: (if any – Conservative Treatment) Inventory Valuation at the lower of cost or Market Value i. Calculate Average Cost per Kg ii. Deduct closing inventory valued at lower of cost = Cost of Goods Sold iii. Note: If Step 2 is performed, DO NOT perform Step 3 c. Step 3: Goods Available – Ending Inventory = Cost of Goods Sold Total: Gross Profit = Sales Revenue – Cost of Goods Sold 2. Operating (Overhead) Expenses: a. Sales, General and Administration Expenses i. Salaries ii. Research and Development iii. Marketing iv. Travel and Entertainment v. Utility Bills vi. Rent vii. Office Supplies b. Accrued Expenses (if any) i. Cash Paid in Current Period ii. Deduct: Owed from Previous Period
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