Question

Can someone thoroughly go over, explain, and give detailed step by step examples of the following below. (Please don’t answer if you’re unsure at all) And if possible TYPE everything out.

-Income Statement

-Balance Sheet

-Standard Journal Entry

-Adjusting Journal Entry

-Closing Entries

Answer 1

Due to character limit I have also attached the image which contains more elaborate details of the topics.

Income Statement

The Income Statement is one of a company’s core financial statements that shows their profit and loss over a period of time. The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non-operating activities.

The income statement is one of three statements used in both corporate finance (including financial modeling) and accounting. The statement displays the company’s revenue, costs, gross profit, selling and administrative expenses, other expenses and income, taxes paid, and net profit, in a coherent and logical manner.

This statement is a great place to begin the financial model, as it requires the least amount of information from the balance sheet and cash flow statement

Components of an Income Statement

The income statement may have minor variations between different companies, as expenses and income will be dependent on the type of operations or business conducted. However, there are several generic line items that are commonly seen in the income statement.

The most common income statement items include:

Revenue/Sales

Cost of Goods Sold (COGS)

Gross Profit

Marketing, Advertising, and Promotion Expenses

General and Administrative (G&A) Expenses

EBITDA

Depreciation & Amortization Expense

Operating Income (or EBIT)

Interest

Other Expenses

EBT (Pre-Tax Income)

Income Taxes

Net Income

Balance Sheet

A balance sheet is a statement of the financial position of a business which states the assets, liabilities and owner's equity at a particular point in time. In other words, the balance sheet illustrates your business's net worth.

The balance sheet may also have details from previous years so you can do a back-to-back comparison of two consecutive years. This data will help you track your performance, and will identify ways in which you can build up your finances and see where you need to improve.

You can also use the balance sheet to determine how to meet your financial obligations and figure out the best ways in which you can use credit to finance your operations.

The balance sheet is the most important of the three main financial statements used to illustrate the financial health of a business.

Incorporated businesses are required to include balance sheets, income statements, and cash flow statements in financial reports to shareholders and tax and regulatory authorities

The items listed on balance sheets vary from business to business depending on the industry, but in general, the balance sheet is divided into the following three sections:

Assets

Liabilities

Equity/Earnings

Standard Journal Entry

A standard journal entry is a journal entry that is recorded in every accounting period. For example, a company issuing monthly financial statements might record depreciation by debiting Depreciation Expense for $3,000 and crediting Accumulated Depreciation for $3,000 each and every month. If the accounts and the amounts are identical each month, the standard journal entry might be referred to as a memorized entry if the accounting software produces and records the entry. Some accountants refer to this type of standard journal entry as a recurring journal entry.

Adjusting Journal Entry

An adjusting journal entry is an entry in financial reporting that occurs at the end of a reporting period to record any unrecognized income or expenses for the period. When a transaction is started in one accounting period and ended in a later period, an adjusting journal entry is required to properly account for the transaction.

Adjusting journal entries can also refer to financial reporting that corrects a mistake made previously in the accounting period.

An adjusting journal entry is also known as a "balance day adjustment."

Adjusting journal entries are most commonly of three types — accruals, deferrals and estimates.

Closing Entries

Closing entries, also called closing journal entries, are entries made at the end of an accounting period to zero out all temporary accounts and transfer their balances to permanent accounts. In other words, the temporary accounts are closed or reset at the end of the year. This is commonly referred to as closing the books.

There are three general closing entries that must be made.

Close all revenue and gain accounts.

Close all expense and loss accounts.

Close all dividend or withdrawal accounts.