54 Chapter 2. The Financial Statements A Closer Look TEST YOUR KNOWLEDGE: FINANCIAL STATEMENTS AND ACCOUNTS (continued) Classify the following descriptions under the appropriate headings and prepare an income statement in proper form without account balances. 1. Office salary 5. Salespeople expense commission 2. Sales of services expense provided 6. Depreciation 3. Insurance expense expense 4. Sales of inventories 7. Office supplies expense 8. Loss on sale of equipment 9. Income from interest on savings account 10. Income from dividends on investments 11. Advertising expense 12. Loss on sale of building 13. Interest expense on outstanding loans 14. Cost of sold inventories 15. Gain on sale of short-term investments