Elements of Income Statement

Question 1

Income Statement

Answer 1

• it summarizes the results of a company’s operations for a period of time.

Question 2

Revenues or Income

Answer 2

are inflows or settlements of liabilities (or a combination of both) during a particular accounting period

Question 3

Service Income

Answer 3

– revenue earned from the rendering of services

Question 4

Sales

Answer 4

income earned from the sale of goods

Question 5

Interest Income

Answer 5

revenue earned from the issuance of interest-bearing receivables

Question 6

Gain

Answer 6

– income earned from the sale of assets or other activities not related to the main operations of the business.

Question 7

Expenses

Answer 7

refer to decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrence of liabilities that result in a decrease in equity, other than those relating to distribution to equity participants.

Question 8

Supplies Expense

Answer 8

– this represents the cost of supplies that were used and consumed during the period

Question 9

Rent Expense

Answer 9

for the amount paid or incurred for use of property, usually premises

Question 10

Salaries Expense

Answer 10

for compensation given to employees of a business

Question 11

Uncollectible/ Bad Debts Expense

Answer 11

for the anticipated loss that the business may incur arising from uncollectible accounts

Question 12

Depreciation Expense

Answer 12

– for the portion of the cost of property and equipment or fixed assets that have expired based on systematic allocation procedure

Question 13

Taxes and Licenses

Answer 13

for the amount paid for the business permits, licenses, and other government dues

Question 14

Insurance Expense

Answer 14

for the expired portion of the insurance premium paid

Question 15

Utilities Expense

Answer 15

for the telephone, light and water bills