Financial Statements

Preparing Financial Statements

Financial statements are prepared from

the balances from the adjusted trial
balance. The financial statements are
made at the very last of the accounting
period.
INCOME STATEMENT
• An income statement is a summary of the
revenues and expenses of a business over a
period of time, usually either one month,
three months, or one year.
• Summarizes the results of the firm’s
operating and financing decisions during that
time.
Balance Sheet
A summary of the assets, liabilities, and equity of a business at a
particular point in time. The formula for a balance sheet is basically the
accounting equation.
 PIONEER ADVERTISING AGENCY
Adjusted Trial Balance
as at 31 October 2010
Account Debit Credit
Cash $15 200
Accounts Receivable 200
Advertising Supplies 1 000
Prepaid Insurance 550
Office Equipment 5 000
Accumulated Depreciation
- Office Equipment $ 40
Notes Payable 5 000
Accounts Payable 2 500
Unearned Income 800
Salaries Payable 1 200
Interest Payable 50
CR Hill, Capital 10 000
CR Hill, Drawings 500
Service Revenue 10 600
Salaries Expense 5 200
Advertising Supplies Expense 1 500
Rent Expense 900
Insurance Expense 50
Interest Expense 50
Depreciation Expense 40
$30 190 $30 190