Expanded Ledger
 Income Statement:
Revenue,
Expenses
Drawings
REF CHAPTER 5, P. 118-124
Practice:
p.124 exercises #1,2,4
p. 126 exercises #3,5
Expanded Ledger Income
Statement: Revenue, Expenses
1
Revenue, Expenses
& Drawings (dividends)
• When a company
earns money  the
equity section of
the balance sheet
_________
• When a company
pays expenses and
/ or the owner
takes money out of
the business for
personal use  the
equity section of
the balance sheet
__________.
Expanded Ledger Income
Statement: Revenue, Expenses
2
Revenue, Expenses
& Drawings (dividends)
REVENUES:

EXPENSES:

DRAWINGS (or DIVIDENDS if a corporation)

Expanded Ledger Income
Statement: Revenue, Expenses
3
Example: Burt’s Pigeon Clean-up Inc.
cleaned the sidewalk in front of the school
and invoiced the school $500.
remember double entry accounting DR=CR
Revenue (making
money) increases
equity
Increases in equity
are credit entries
Revenue accounts
are credited
A/R
Expanded Ledger Income
Statement: Revenue, Expenses
Revenue
4
are things (costs) that
the company has to pay for in order
to make revenue. Expenses
________ equity.
Examples of expenses:
Expanded Ledger Income
Statement: Revenue, Expenses
5
Example: Burt’s Pigeon Clean-up Inc. cleaned the
sidewalk in front of the school and invoiced the school
$500. On payday, Burt paid Earnie and Elmo $100 each
for their clean up of the school; the cost of cleaning
material for the job was $75
 Expenses (spending


money) _________
equity
Decreases in equity
are _______ entries
Expense accounts are
debited
.
Wages Exp.
Supply Exp.
Expanded Ledger Income
Statement: Revenue, Expenses
Bank
6
Most businesses usually have one (sometimes
a few) revenue accounts.
All expense accounts will usually have a debit
balance.
All expense accounts will usually have a debit
balance.
Businesses have many different expense
accounts.
Expanded Ledger Income
Statement: Revenue, Expenses
7
NET INCOME (NET LOSS):
• The difference between the revenues and the
expenses for a time period represents the profit
for the business.

Revenue – Expenses = Net Income or Profit

Revenue
Expenses = Net Profit

Revenue
Expenses = Net Loss
Expanded Ledger Income
Statement: Revenue, Expenses
8
DRAWINGS
An owner of a business is entitled to some of
the profits of the company, thus may
withdraw money from the company (like a
salary or dividends if a corporation) on a
regular basis.
 Drawings ___________ equity
 Decreases in equity are debit entries
 Drawings accounts are _______
However, drawings are ____________
because they have no bearing on the net
income of the business (equity yes, profits
no!)
Expanded Ledger Income
Statement: Revenue, Expenses
9
Example: Bert withdraws $200 cash and
$50 of cleaning supplies form his
company for personal use.
Drawings
Bank
Expanded Ledger Income
Statement: Revenue, Expenses
Supplies
10
Sample Income Statement:
Bert's Pigeon Cleaning Ltd.
Income Statement
For the Month Ending July 30, 2--Revenue
Cleaning Fees
$15,500
Expenses
Advertising
550
Vehicle
2040
Wages
7000
Other
275
Total Expenses
9865
Net Income
$5,635
Expanded Ledger Income
Statement: Revenue, Expenses &
11