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    Income statement :Identification of various accounts

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    Practice problem

    Financial statement account identification. Mark each of the accounts listed in the following table as follows:
    a. In column (1), indicate in which statement - income statement (IS) or balance sheet (BS) - the account belongs.
    b. In column (2), indicate whether the account is a asset (A), liability (L), expense (E), fixed asset (FA), revenue (R), or stockholders' equity (SE).

    Account Name (1) Statement (2) Type of Account
    Accounts payable
    Accounts receivable
    Administrative expense
    Buildings
    Cash
    Common stock
    Cost of goods sold
    Depreciation
    Equipment
    General expense
    Land
    Machinery
    Notes payable
    Operating expense
    Prepaid salary
    Retained earnings
    Rent
    Sales revenue
    Selling expense

    Income statement preparation. Use the appropriate items from the following list to prepare an Income Statement
    for the year ended December 31, 2007. Make sure you calculate the net income/loss before and then after tax expense.
    The tax rate is 40% for this company.
    Item Values ($000) at or for year ended December 31, 2000

    Accounts receivable $350
    Accumulated depreciation 205
    Cost of goods sold 285
    Depreciation expense 55
    General and administrative expense 60
    Interest expense 25
    Preferred stock dividends 10
    Sales revenue 525
    Selling expense 35
    Stockholders' equity 265

    In the income statement that you prepared above, calculate the following ratio:

    Times Interest Earned = Net income + interest expense + tax expense
    interest expense

    What are the three internal control objectives for financial reporting?

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    Solution Preview

    Problem 1

    Financial statement account identification. Mark each of the accounts listed in the following table as follows:
    a. In column (1), indicate in which statement - income statement (IS) or balance sheet (BS) - the account belongs.
    b. In column (2), indicate whether the account is a asset (A), liability (L), expense (E), fixed asset (FA), revenue (R), or stockholders'
    equity (SE).

    Account Name (1) Statement (2) Type of Account
    Accounts payable BS L
    Accounts receivable BS A
    Administrative expense IS E
    Buildings BS FA
    Cash BS A
    Common stock BS SE
    Cost of goods sold IS E
    Depreciation IS E
    Equipment BS FA
    General ...

    Solution Summary

    Excel file contains income statement , calculation of ratios and identification of financial statement accounts.

    $2.19