Explore BrainMass

# Income statement :Identification of various accounts

Not what you're looking for? Search our solutions OR ask your own Custom question.

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

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
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
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?

#### 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
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.

\$2.49