The correct equation to describe the major elements of the Statement of Operations is? Revenue minus Expenses= Assets Expenses minus Revenues= Excess of Revenues Over Expenses Revenues minus Expenses = Net Assets Expenses minus Revenues = Net Revenues Revenues minus Expenses= Excess of Revenues Over Expenses
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Step 1: The Statement of Operations is also known as the Income Statement. Show more…
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The Income Statement and Balance Sheet columns of a worksheet are produced below. Indicate with an "X" the specific Income Statement or Balance Sheet column(s) in which each amount transferred from the Adjusted Trial Balance columns should be placed, if at all, and select "NE" for No effect. Income Statement Balance Sheet Account Title Debit Credit Debit Credit 1. Assets 2. Contra-Asset 3. Liabilities 4. Owner, Capital 5. Owner, Drawing 6. Revenue 7. Expense 8. Net Income 9. Net Loss
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Assets = Liabilities + Owners Equity Income Statement As we have progressed through a series of business transactions, we have illustrated the effects of Overnights January transactions on the balance sheet. To review, Overnight's transactions during January were as follows, with the resulting bal- ance sheet indicated in parentheses: Jan.20 Michael McBryan started the business by depositing $80,000 received from the sale of capital stock in a company bank account (Exhibit 22). Jan.21 Purchased land for $52,000, paying cash (Exhibit 23). Jan. 22 Purchased a building for $36,000, paying $6,000 in cash and issuing a note payable for the remaining $30,000 (Exhibit 24). Jan.23 Purchased tools and equipment on account, $13,800 (Exhibit 25). Jan. 24 Sold some of the tools at a price equal to their cost, S1,800, collectible within 45 days (Exhibit 26). Jan.26 Received $600 in partial collection of the account receivable from the sale of tools (Exhibit 27). Jan.27 Jan.31 Received $2,200 of sales revenue in cash (Exhibit 29). Jan. 31 wages (Exhibit 210). The expanded accounting equation in Exhibit 211 shows the effects of these transac- tions on the accounting equation. The effect of each transaction is shown in red. Notice that the balances, shown in black, are the amounts appearing in Overnights balance sheets in Exhibits 22 through 210. Notice also that the accounting equation is in balance after each transaction. While this table represents the impact of Overnights transactions on the accounting equa- tion, and thus on its financial position as shown in its balance sheet, we can now see how the income statement and statement of cash flows enter the picture. Specifically, the income statement is a separate financial statement that shows how the statement of financial posi- tion changed as a result of its revenue and expense transactions. The statement of cash flows shows how the companys cash increased and decreased during the period. Multiple transactions significantly change the enterprise's financial position
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