BU231 Chapter 3: Accounting Chapter 3 – Operating Decisions and The Income Statement.docx
Document Summary
The costs of generating revenue include expenses incurred such as the following: salaries to employees who worked during the period (salaries expense, utilities for electricity used during the period (utilities expense, mil cocoa, sugar and other ingredients used to produce nutrition and health foods sold during the, facilities rented during the period (rent expense, use of buildings and equipment for production purposes during the period (depreciation expense) period (cost of goods sold) Increase when profit is realized and decrease when a loss occurs: retained earning is the accumulation of all past revenues and expenses minus any profit distributed as, revenues increase profit thus increasing retained earning and shareholders" equity this having, expenses decrease profit, thus decreasing retained earnings and shareholders" equity, therefore" expenses have debit balances; increasing an expense you debit it which increases profit credit balances. and retained earnings.
