> > > > > > > > Chapter 3

Basic Accounting Concepts: Financial Accounting

 shows the outcome of each operation for every project at a certain specific duration of time. It can be prepared at the end of the month, semester, quarter or year. This statement will show how much the business earns or loses during the period

1. The entity to which it relates 2. Name of the statement 3. The time period covered

Garsden Corporation
Income Statement For the Year Ended December 31,2012

Net Sales Cost of Sales Gross Margin Research and Development Expense Selling, general and administrative expense Operating income Other Revenues (expenses): Interest Expense Interest and dividend revenues Royalty Revenues Income before income taxes Provision for income taxes Net Income Earnings per common stock
Statement of Retained Earnings

Net Sales
Gross Sales Returns and allowances - Sales Discount Returns and Allowances Value of goods returned by the customer Sales Discount Discounts taken by the customer for prompt payments

Retained Earnings at the beginning of the year Add: Net Income Deduct: Dividends ($4 per common share) Retained Earnings at the end of the year

Garsden Corporation
Income Statement For the Year Ended December 31,2012

Net Sales Cost of Sales Gross Margin Research and Development Expense Selling, general and administrative expense Operating income Other Revenues (expenses): Interest Expense Interest and dividend revenues Royalty Revenues Income before income taxes Provision for income taxes Net Income Earnings per common stock
Statement of Retained Earnings

Inventories which has been consumed in generating the sales revenue The difference between net sales and cost of sales Can be also called as gross profit

Retained Earnings at the beginning of the year Add: Net Income Deduct: Dividends ($4 per common share) Retained Earnings at the end of the year

Garsden Corporation
Income Statement For the Year Ended December 31,2012

Net Sales Cost of Sales Gross Margin Research and Development Expense Selling, general and administrative expense Operating income Other Revenues (expenses): Interest Expense Interest and dividend revenues Royalty Revenues Income before income taxes Provision for income taxes Net Income Earnings per common stock
Statement of Retained Earnings

Expenses that provide an important clue as to how aggressive the company in keeping the product and Expenses on the process of processes also date selling and up to includes wages and salaries

Retained Earnings at the beginning of the year Add: Net Income Deduct: Dividends ($4 per common share) Retained Earnings at the end of the year

Garsden Corporation
Income Statement

For the Year Ended December 31,2012

Net Sales Cost of Sales Gross Margin Research and Development Expense Selling, general and administrative expense Operating income Other Revenues (expenses): Interest Expense Interest and dividend revenues Royalty Revenues Income before income taxes Provision for income taxes Net Income Earnings per common stock
Statement of Retained Earnings

Result after other revenues are added or expenses are deducted An Expense based on bank loan

Retained Earnings at the beginning of the year Add: Net Income Deduct: Dividends ($4 per common share) Retained Earnings at the end of the year

Garsden Corporation
Income Statement

For the Year Ended December 31,2012

Net Sales Cost of Sales Gross Margin Research and Development Expense Selling, general and administrative expense Operating income Other Revenues (expenses): Interest Expense Interest and dividend revenues Royalty Revenues Income before income taxes Provision for income taxes Net Income Earnings per common stock
Statement of Retained Earnings

Revenue received based on money loaned from the borrowers

Retained Earnings at the beginning of the year Add: Net Income Deduct: Dividends ($4 per common share) Retained Earnings at the end of the year

Garsden Corporation
Income Statement

For the Year Ended December 31,2012

Net Sales Cost of Sales Gross Margin Research and Development Expense Selling, general and administrative expense Operating income Other Revenues (expenses): Interest Expense Interest and dividend revenues Royalty Revenues Income before income taxes Provision for income taxes Net Income Earnings per common stock
Statement of Retained Earnings

Tax to be paid to the government

Retained Earnings at the beginning of the year Add: Net Income Deduct: Dividends ($4 per common share) Retained Earnings at the end of the year

Garsden Corporation
Income Statement

For the Year Ended December 31,2012

Net Sales Cost of Sales Gross Margin Research and Development Expense Selling, general and administrative expense Operating income Other Revenues (expenses): Interest Expense Interest and dividend revenues Royalty Revenues Income before income taxes Provision for income taxes Net Income Earnings per common stock
Statement of Retained Earnings

Income after all expenses and taxes are deducted

Retained Earnings at the beginning of the year Add: Net Income Deduct: Dividends ($4 per common share) Retained Earnings at the end of the year

Garsden Corporation
Income Statement For the Year Ended December 31,2012

Net Sales Cost of Sales Gross Margin Research and Development Expense Selling, general and administrative expense Operating income Other Revenues (expenses): Interest Expense Interest and dividend revenues Royalty Revenues Income before income taxes Provision for income taxes Net Income Earnings per common stock
Statement of Retained Earnings

75,478,221 52,227,004 23,251217 2,158,677 8,726,696

12,365,844
(363,000) 43,533 420,010 12,466,555 4,986,555 7,479,832 $6.82

Retained Earnings at the beginning of the year Add: Net Income Deduct: Dividends ($4 per common share)

16,027,144 7,479,832

(4,390,000)

GMP =

Gross margin net sales 23,251,217 75,478,221 0.308 x100% 30.8%

Average margin obtained on products

GMP = GMP =
GMP =

PM =

Net income net sales 7,479,832 75,478,221 0.099 x100% 9.9%

Normal is 1.5 and above

PM = PM =
PM =