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C4cz2HkeY
ACCOUNTING
January 5, 2016
You will need the book (Page 182)
 You will review the Income Statement
and Balance Sheet and learn how to
complete them

page 182
LESSON 7-1
3
page 182
1
2
3
1. Center the name of the company on the first line.
2. Center the name of the report on the second line.
3. Center the date of the report on the third line.
LESSON 7-1
4
page 183
7
Revenue
1
Expenses
4
Account titles
5
Total expenses
8
2
Single line
3
Account title
6
Revenue amount
Expense amount
9
Total of expenses
12 Net Income
11 Single line
14 Double lines
13 Record net income
10 Calculate net income
LESSON 7-1
5
page 184
LESSON 7-1
6
page 185
5
Revenue
Account titles
Total Revenue
1
2
3
Revenue amounts
4
Net Loss
6
7
LESSON 7-1
Record Net Loss
7
Total of revenue
page 184
LESSON 7-1
8
page 186
stakeholders
 component percentage


Component percentage: the percentage
relationship between one financial
statement item and the total that includes
that item. (p. 184)

Stakeholders: any persons or groups who
will be affected by an action (p. 181)
LESSON 7-1
9

ASSETS = LIABILITIES + OWNERS EQUITY
The Balance Sheet uses the same format
as the accounting equation.
 This part of the chapter will discuss
preparing a balance sheet using data
on the work sheet.

Balance Sheet Reports information for a
SPECIFIC date.
 The data used to prepare the balance
sheet can be obtained from the balance
sheet columns of the worksheet.
 The heading of most financial statements
answers the questions: WHO? WHAT &
WHEN?

page 187
1
2
3
1. Center the name of the company on the first line.
2. Center the name of the report on the second line.
3. Center the date of the report on the third line.
LESSON 7-2
14
Assets
 Liabilities
 Owner’s Equity

page 187
The
Information
needed to
prepare the
assets section
is obtained
from the
Balance Sheet
Debit Column.
LESSON 7-2
16
page 187
The
Information
needed to
prepare the
liabilities
section is
obtained from
the Balance
Sheet Credit
Column.
LESSON 7-2
17
page 188
Liability amounts 6
Account titles 5
1
Assets
4
Liabilities
Total Liabilities
8
Single line
2
Account titles
3
Asset amounts
LESSON 7-2
18
7
Total of liabilities
9

Owners Equity-the amount remaining
after the value of all liabilities is
subtracted from the value of all assets

The information needed to prepare the
owner’s equity section of a balance
sheet is obtained from the Balance
Sheet columns of the work sheet

Capital Account Balance-Net LossDrawing Account Balance=Current
Capital (Page 189)

Lets look at the ten steps for preparing
the owner’s equity section of a balance
sheet.
page 189
1
Owner’s Equity
2
Account title
Total of assets
5
4
Single line
Capital amount 3
6
Total Assets
7
Total Liab. and
Owner’s Eq.
Compare totals 9
10
Double lines
Total of Liabilities and Owner’s Equity 8
LESSON 7-2
21

The Owner’s Equity section of a balance
sheet can show more detail than that
shown on a balance sheet.

A business may choose to show more
details in the owner’s equity section.

There are 9 steps used to prepare the
owner’s equity section reported in detail
on a balance sheet.
page 190
3
Net Income
1
Current capital amount 8
Beginning capital
Difference 6
Beginning capital amount 2
7
4
Ending capital
Drawing
5
9
Single line
Total Liabilities and Owner’s Equity
LESSON 7-2
23
Aplia 7-2 Work Together and On Your
Own (last class)
 Aplia 7-3 Mastery Problem
 Next Class: Study guide for midterm in
class.

› Will be very similar to midterm
› Will not be available in Aplia during midterm
› Will have an additional problem similar to Ch
7 Study guide

Read “Case for Critical Thinking” and
answer the question that follows.

Then Try Applied Communication on the
same page and write down your advice
to your new assistant.

List the four sections on a balance sheet.

What is the formula for calculating
current capital?