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Fabm 1 Lesson 8

The document provides instructions for preparing financial statements from an adjusted trial balance. It discusses preparing an income statement that shows revenues, expenses, and net profit/loss for a period. It also discusses preparing a balance sheet that shows assets, liabilities, and owner's equity as of a point in time. The financial statements are the final product of the accounting cycle and provide information on a company's financial position and performance.

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Dionel Rizo
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65 views

Fabm 1 Lesson 8

The document provides instructions for preparing financial statements from an adjusted trial balance. It discusses preparing an income statement that shows revenues, expenses, and net profit/loss for a period. It also discusses preparing a balance sheet that shows assets, liabilities, and owner's equity as of a point in time. The financial statements are the final product of the accounting cycle and provide information on a company's financial position and performance.

Uploaded by

Dionel Rizo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Fundamentals of

Accountancy, Business
and Management 1
ONLINE CLASS
LECTURE
IN OUR VIRTUAL CLASSROOM

Keep your Use the chat box


microphone on for answering and
MUTE. queries
Respect each other

Wait until your Take down


teacher recognize important details
you
PRAYER
“Let us place ourselves in the presence of
God…”
FAB THE ADJUSTED TRIAL
M 1 BALANCE
Adjusted Trial balance is prepared
after the adjustments have been
made to journal and before the
preparation of the Financial
Statements.
FAB THE WORKSHEET Adjustment Adjusted Trial

M1
Cash
Account Title
Unadjusted Trial Balance
Debit
95,000
Credit Debit Credit Debit
Balance
Credit

Accounts Receivable 5,000


Allowance for Bad Debt
Supplies 2,000 (a) 900 1,100
Prepaid Insurance (3 months) 30,000
Boat 150,000
Accum. Depreciation-Boat
Unearned Rental Revenue 10,000
Salaries Payable 9,000
Utilities Payable
Lucille, Capital 250,000
Rental Revenue 30,000
Salaries Expense 9,000
Repairs and Maintenance 8,000
Insurance Expense
Utilities Expense
Supplies Expense (a) 900 900
Bad Debts
Depreciation Expense
TOTAL 299,000 299,000
FAB THE FINANCIAL
M 1 STATEMENT
Financial statements are the structured presentation of an entity’s
financial position and results of its operations. It is the end
product of the accounting cycle.
The financial statements provide information on:
 How much resources are controlled by an entity and how
these resources were generated (financial position)
 How well the entity performed during a certain period (results
of operation)
FAB THE FINANCIAL
M 1 STATEMENT
Financial statements are the structured presentation of an entity’s
financial position and results of its operations. It is the end
product of the accounting cycle.
The financial statements provide information on:
 How much resources are controlled by an entity and how
these resources were generated (financial position)
 How well the entity performed during a certain period (results
of operation)
FINANCIAL STATEMENT
a. Income Statements or The Statement of Financial Performance
It shows the company’s performance for the period of time,
including Revenues, Expenditures and the company’s NET Profit/Loss
for the period.

b. Balance Sheet or the Statement of Financial Position


It shows the current position of the company in terms of the
resources it owns, the obligations claimed against it and the owner’s
residual interest
Elements of the Financial Statements:
For Income Statements are the Nominal or Temporary Accounts that
are subject for closing at the end of the accounting period
Income
Expenses

For Balance Sheet are the Permanent Accounts such as;


Assets
Liabilities
Owner’s Equity
Preparation of the Income Statement:

1. Heading consist of Company Name, Report


Name and Period Covered.
Ex:
COMPANY CLEANERS
Income Statement
For the month ended June 30, 2019
Preparation of the Income Statement:

2. From the Adjusted Trial Balance, list down all the


Income Account/s and Total If there is more than
one.
Ex. Income
Service Revenue xxx
Commission Income xxx
Interest Income xxx
Total xxx
Preparation of the Income Statement:

3. List down all Expense accounts, under Operating


Expenses, then get the total.
Ex.
Operating Expenses:
Advertising Expense xx
Salaries Expense xx
Utilities Expense xx
Depreciation Expense xx
Total xx
Preparation of the Income Statement:

4. Compute for the Net Profit or Loss by Deducting


Total Operating Expenses to Total Income.

Net Profit/Loss xxx


Preparation of the Income Statement:

4. Compute for the Net Profit or Loss by Deducting


Total Operating Expenses to Total Income.

Net Profit/Loss xxx


Notes:

Since this is a basis for economic decision of the user, list


down the expenses from the largest amount to lowest amount.
So that the user can easily see what expenses partakes the
larger amount spent.

Net Profit if Income is more than its operating expenses. Net


Loss if the expenses are more that the total income.
Preparation of the Balance Sheet

1. Heading consist of Company Name, Report Name and


Period Covered.

Ex:
COMPANY CLEANERS
Balance Sheet
As of June 30, 2019
Preparation of the Balance Sheet
2. From the Adjusted Trial
Balance, list down all the Asset
Accounts, Separate Current
Asset from Non-Current Assets
then get the total Assets.
Preparation of the Balance Sheet
3. List down all Liability accounts, Separate Current and Non-
Current Liability.
Preparation of the Balance Sheet
4. List down accounts under Owner’s Equity such us the
following:

ABM, Capital xxx


Less: ABM, Drawing xxx
Add/Less: Net Profit/loss xxx

Total Owner’s Equity xxx


Preparation of the Balance Sheet
5. Get the total of Total Liabilities and Total Owner’s Equity.

Ex.
Total Liabilities and Owner’s Equity xxx

Note: This amount must be equal to total assets


Preparation of the Balance Sheet

Remember the Accounting Equation goes like this

Assets = Liabilities + Owner’s


Equity.

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