Concept explainers
(a)
Assets (A): Assets are those items that provide value for money and future economic benefit for an organization. In simple, it can be referred to as resources possess by a business. Example: Cash,
Liabilities (L): Liabilities are debt and obligations of a business. These are the claims of creditors and financial institutions against the resources of the business. Example: Accounts payable, long-term debt, and notes payable.
Expenses (E): Expenses are the costs that the businesses spend to produce and sell the goods and services to the customers or clients. Example: Cost of goods sold, rent expense, and interest expense.
Revenues (R): Revenues are the income or earnings that a business receives for delivering the goods and services. Example: Service revenue, interest revenue, and gain from sale of land.
To identify: whether the given item is an asset (A), Liability (L), Stockholders’ equity (SE), Revenue (R), or Expense (E) item.
(b)
To prepare: An income statement for Incorporation L for the year ended December 31, 2017.
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FINANCIAL ACCT.:TOOLS...(LL)-W/ACCESS
- Income Statement, Statement of Retained Earnings, and Balance Sheet The following list, in alphabetical order, shows the various items that regularly appear on the financial statements of Sterns Audio Book Rental Corp. The amounts shown for balance sheet items are balances as of December 31, 2016 (with the exception of retained earnings, which is the balance on January 1, 2016), and the amounts shown for income statement items are balances for the year ended December 31, 2016. Required Prepare an income statement for the year ended December 31, 2016. Prepare a statement of retained earnings for the year ended December 31, 2016. Prepare a balance sheet at December 31, 2016. You have $1,000 to invest. On the basis of the statements you prepared, would you use it to buy stock in this company? Explain. What other information would you want before deciding?arrow_forwardThe following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2019: Instructions 1. Prepare a multiple-step income statement. 2. Prepare a statement of owners equity. 3. Prepare a balance sheet, assuming that the current portion of the note payable is 50,000. 4. Briefly explain how multiple-step and single-step income statements differ.arrow_forwardFinancial information related to Udder Products Company, a proprietorship, for the month ended April 30, 2016, is as follows: a. Prepare a statement of owners equity for the month ended April 30, 2016. b. Why is the statement of owners equity prepared before the April 30, 2016, balance sheet?arrow_forward
- Income Statement, Statement of Retained Earnings, and Balance Sheet The following list, in alphabetical order, shows the various items that regularly appear on the financial statements of Maple Park Theatres Corp. The amounts shown for balance sheet items are balances as of September 30, 2016 (with the exception of retained earnings, which is the balance on September 1, 2016), and the amounts shown for income statement items are balances for the month ended September 30, 2016. Required Prepare an income statement for the month ended September 30, 2016. Prepare a statement of retained earnings for the month ended September 30, 2016. Prepare a balance sheet at September 30, 2016. You have $1,000 to invest. On the basis of the statements you prepared, would you use it to buy stock in Maple Park? Explain. What other information would you want before making a final decision?arrow_forwardSelected accounts and related amounts for Kanpur Co. for the fiscal year ended June 30, 2016, are presented in Problem 6-5B. Instructions 1. Prepare a single-step income statement in the format shown in Exhibit 11. 2. Prepare a statement of owners equity. 3. Prepare an account form of balance sheet, assuming that the current portion of the note payable is 7,000. 4. Prepare closing entries as of June 30, 2016.arrow_forwardSelected accounts and related amounts for Clairemont Co. for the fiscal year ended May 31, 2016, are presented in Problem 6-5A. Instructions 1. Prepare a single-step income statement in the format shown in Exhibit 11. 2. Prepare a statement of owners equity. 3. Prepare an account form of balance sheet, assuming that the current portion of the note payable is 50,000. 4. Prepare closing entries as of May 31, 2016.arrow_forward
- Reading and Interpreting Chipotles Financial Statements Refer to the financial statements for Chipotle reproduced in the chapter and answer the following questions. What was the companys net income for 2014? State Chipotles financial position on December 31, 2014, in terms of the accounting equation. By what amount did Leasehold improvements, property and equipment, net, increase during 2014? Explain what would cause an increase in this item.arrow_forwardUsing the following data for Ousel Travel Service as well as the statement of owners equity shown in Practice Exercise 1-5A, prepare a balance sheet as of November 30, 2016:arrow_forwardFinancial information related to Udder Products Company, a proprietorship, for the month ended April 30, 2019, is as follows: a. Prepare a statement of owners equity for the month ended April 30, 2019. b. Why is the statement of owners equity prepared before the April 30, 2019, balance sheet?arrow_forward
- Prepare an income statement using the following information for CK Company for the month of February 2019.arrow_forwardThe following revenue and expense account balances were taken from the ledger of Wholistic Health Services Co. after the accounts had been adjusted on February 29, 2016, the end of the fiscal year: Prepare an income statement.arrow_forwardPrepare a balance sheet using the following information for the Ginger Company as of March 31, 2019.arrow_forward
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