ACCTCY 2036 Chapter Notes - Chapter 5: Gross Profit, Financial Statement, Profit Margin
Document Summary
Key role in the decision making of the users by communicating the company"s revenues, expenses, and net income (cid:523)or loss(cid:524) for a specific period. Temporary accounts- a company uses revenue and expense accounts for only one accounting period to record the effects of its transactions on its net income. Permanent accounts- assets, liability, and the owner"s capital accounts. The retail company"s income statement because they are used for the life of the company to record the effects of its transactions on its balance sheet. Revenues are the prices charged to customers and result in increases in assets (cash or accounts receivable) or decreases in liabilities (unearned revenues) Expenses are the cost of providing goods and services and result in decreases in assets or increases in liabilities. Operating income includes all the revenues earned and expenses incurred in the primary operating activities of the company: revenues, cost of goods sold, operating expenses.
