PART : INCOME STATEMENT PREPARATION

Generally accepted accounting principles (GAAP) require organizations to prepare both an income statement and a balance sheet. Before the balance sheet can be prepared, the organization’s net income must be determined. This requires the accountant to pull together data from numerous system accounts and other sources of information. In this part of the assessment, demonstrate your skill in putting together the necessary account data and preparing an income statement in good form.

Use the Assessment 2, Part 3 Template to complete Part 3 of the assessment. On the first page of the template is financial data for Southwest Business School. On the second page is a blank income statement. Use the information provided on the first page to prepare the income statement on the second page.

PART 4: ANALYZING ITEMS IN THE FINANCIAL STATEMENT

Balance sheets do not always balance once they are prepared, and income statements do not always contain correct account data. This can cause havoc across the accounting department and requires the accountant to locate the missing or incorrect data. Financial statement preparation will be an important skill during this process, as you will discover when you determine the missing amounts in the statement in this part of the assessment.

Use the Assessment 2, Part 4 template to complete Part 4 of the assessment. In each of the two sets of organization financial statement information provided in the template, two items have been omitted. Analyze the financial statements to determine the missing amounts and fill them in on the template to complete the financial statement information. Be sure to show your work in the space provided under the table in the template.