Explain The Following Parts Of An Income Statement
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• In a document totaling a minimum of one page, explain the following parts of an income statement: o Gross profits – is defined as a company’s total revenue minus the cost of goods sold. This is the profit that a company makes after they deduct their costs that are associated with making the products. This also includes selling the product and anything associated with providing it. This is located on your company’s income statement. The formula used to calculate this is as follows: gross profit == revenue – cost of goods sold. http://www.investopedia.com/terms/g/grossprofit.asp o Operating expenses – is an expense that a business has through its normal business operations. This includes rent, inventory, equipment,
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ACC 201 Final Project Part I Accounting Cycle Report Vanessa Ann Williams Southern New Hampshire University The accountant cycle has really impacted me to gain insight on the financial side of Peyton Company. In the accountant cycle, there are many particular directions involve determining the growth of the company such as steps, role, omission and financial statements. It’s important to apply every step from the accountant cycle to make a financial critical decision in the long run. This report will have a breakdown of how to apply the accountant cycle for Peyton Company to be aware of future financial decisions to keep the company holding strong.
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This information is important to have, because if the company had to borrow money, how much it cost to produce the products, and how much the operating expenses are. The income statement is to help determine if the company is making or losing money (Bethel University, 2011). Statement of Stockholders’ equity is to show the last year of retained earnings, it shows the net income from the income statement for the year, it has the dividends during the whole period of the year, and it has the ending retained earnings. This statement is used to help the company keep track of any changes in the stockholders’ equity. It also shows the relationships between the balance sheet, income statement, and the stockholders’ equity (Bethel University, 2011).
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First, start with the total amount of sales made during the accounting period known as gross revenue. A gross revenues or sale is the total amount of money brought in from sales of products or services it’s known as gross because expenses have not been deducted from it yet (Bethel University, 2017). Next, make a deduction for certain costs and other operating costs connected with producing the revenue. This would include, sales discounts or merchandise returns this would be an expense because they do not expect compensation for these types of expenses. Finally, after deducting all of the expenses, the company knows how much the company actually made or lost during the accounting
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Profit can be defined as the difference between the amount earned and the amount spent on expenses used to provide goods and services. 2.
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The objectives identify the goals and purposes of financial reporting and the fundamentals are the underlying concepts that help achieve those objectives. Those concepts provide
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The production function is responsible for producing the products or services that will be sold to its customers. Marketing function consists of processes and development, pricing, promotion, and distribution of goods and services to customers (Sawyer, Jackson, & Jenkins, 2013). Examples of accounting information that would be useful for the marketing and production managers meeting at Grant Enterprises would be first, the overall expected cost for development for the new product. Evaluating the cost of production gives you the ability to set the price at the most competitive point for the new product.
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What do pro forma financial statements show? There are various things Pro forma financial statement shows but first, let’s understand the word pro forma which means a financial statement based on projection and assumption of what the business future would be to determine what should be happening now. Pro forma financial statement can be thought of as a “Projected results for financial statements in the future, given assumptions about what will happen in the meantime” (Siegel & Yacht, 2009, p. 81).
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Use a narrative with a table to show calculations for cost categories. Provide reasonable estimates for each of the categories. Specific or in-depth financial analysis is not. Fixed costs refer to the expenses that are incurred by the company but they do not change when there is either an increase or a decrease in the amount of the goods that are produced or sold. The company has to pay these costs independent of the business activity.
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A profit and loss statement or P&L is a financial statement that recapitulate the revenues, costs and expenses sustained during a specific period of time usually taken place in a budgetary quarter or a year. The data acquired by this method is used to provide information of the company’s ability or loss thereof to generate profit by increasing revenue (+) or reducing costs (-) or sometimes even both. The year of 2017 has been a rough year for major independent record labels, in terms of the album sales that have continued to decline steadily throughout the past few years due to the presence of other music streaming platforms and according to Amy Macy, “the consumers [began] looking elsewhere to satiate their burgeoning musical
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Ever wonder where all the money has gone since last payday? When I receive my income tax statements (W2’s) in the beginning of each year, I always wonder what I spent all of that money on throughout the last year. Normally, I don’t question the amount of money that I receive on a weekly or bi-weekly basis as much as I do when viewing my yearly income statements. I chose to create a budget to save at least six months’ worth of all my monthly expenses in the event that I am ever unemployed or my health prevents me from working. Although budgets are hard to stick to, I always use them to keep track of spending habits and as a tool for saving money for emergencies.
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Your gross income is the amount of money that you make before taxes. Gross income includes all realized income from whatever source derived. Realized income is generated in a transaction with a second party in which there is a measurable change in property rights between parties. Gross income is the starting point for determining Federal and state income tax of individuals, corporations, estates and trusts, whether resident or nonresident. There are many different things that go into income such as wages, interest received, dividends, gross profit from sale of inventory and gains on property.
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It consists of all the income which causes changes in the stock holder’s equity e.g.-unrealized gains or losses, retirement investments or pension schemes, foreign currency adjustments etc. This statement helps in the future planning of the organization. Statement of Cash flows is a statement that provides information regarding the cash inflows and outflows of a business. Cash generated is categorized under three headings in the Statement of Cash flows namely Operating Cash Flows, Investing Cash Flows and Financing Cash Flows. It identifies the liquidity position of an entity and helps managers take relevant measures
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Historical inventory “cost” is used in applying the lower of cost or net realizable value over the entire period that the inventory is held. Write-downs are reversed as selling prices rise. Over the entire period of an enterprise, the amount of expense and profit are the same in the income statement on US GAAP and IFRS. However, the inventory and cost of goods sold balances can vary dramatically in any given period.
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Where she currently works, her salary is $1800 monthly. After calculating all the cost for equipment, rental and hired help, she pays $1000. She projected her earnings to be $2100 monthly. The accounting profit would be $2100-$1000=$1100. What she is left with in her pocket after covering all the expenses is the accounting profit.
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