Use the data in Table 1 to describe how you can prepare Annu

Use the data in Table 1 to describe how you can prepare Annual Income Statement and Balance Sheet Statement. Capital Operating & Maintenance, and Revenue Data

Solution

1. TO CREATE ANNAUL INCOME STATEMENT

WRITE ALL REVENUES
WRITE ALL EXPENSE

SUBTRACTION WILL GIVE THE NET INCOME

single-step income statement – the single step statement only shows one category of income and one category of expenses. This format is less useful of external users because they can\'t calculate many efficiency and profitability ratios with this limited data.

Multi-step income statement - the multi-step statement separates expense accounts into more relevant and usable accounts based on their function. Cost of goods sold, operating and non-operating expenses are separated out and used to calculate gross profit, operating income, and net income.

In both income statement formats, revenues are always presented before expenses. Expenses can be listed alphabetically or by total dollar amount. Either presentation is acceptable.

Income statement expenses can also be formatted by the nature and the function of the expense.

2.

The balance sheet, also called the statement of financial position, is the third general purpose financial statement prepared during the accounting cycle. It reports a company\'s assets, liabilities, and equity at a single moment in time. You can think of it like a snapshot of what the business looked like on that day in time.

IT CONTAINS BELOW SECTIONS

1. ASSET SECTION
2. LIABILITY SECTION
3 EQUITY SECTION

Similar to the accounting equation, assets are always listed first. The asset section is organized from current to non-current and broken down into two or three subcategories CURRENT LONG TERM OTHER

liabilities are also reported in multiple subcategories. There are typically two or three different liability subcategories in the liabilities section: current, long-term, and owner debt.

Unlike the asset and liability sections, the equity section changes depending on the type of entity. For example, corporations list the common stock, preferred stock, retained earnings, and treasury stock. Partnerships list the members’ capital and sole proprietorships list the owner’s capital.