From the last lesson we see the Balance Sheet prepared at the end of the month contains ALE Assets = Liabilities + Equity. A=L+E The Income Statement will report how much $ the business made/lost for the monthNet Income/. The first 5 chapters are dealing with a Service Business we either charge our customers by the hour or a flat fee. Every time work is done the business is worth more. If we do a $80 job we will collect & our CASH Asset goes up (A=L+E)CASH goes up EQUITY (worth of the Business) goes up.If we do not collect immediately then ACCOUNT RECEIVABLE Asset goes up & EQUITY goes up. Depending upon the type of business; the work may be called SERVICE REVENUE or FEES EARNED or RENT REVENUE or INTEREST INCOME. EXPENSES are defined as anything you use to operate the business each month.Rent, Electric, Etc. Every time you have an Expense the business is worth less as your CASH Asset goes down & to maintain A=L+E the EQUITY must go down. Please turn to Page 20.4 Financial Statements are shownSo far we have talked about the Balance Sheet & the Income Statement.We will deal with the Equity Statement in Chapter 4.. The Cash Flow Statement is a chapter in the next course. All the $ amounts that we see listed on the statements came from a book called the GENERAL LEDGER.This book is in Chapter 2Each page of this book is called a ACCOUNT If we imagine the pages of the book in alphabetic order we would find: Accounts Payable Accounts Receivable Building Cash Equipment Fees Earned Land OwnerDrawing OwnerEquity Rent Revenue Supplies Utilities Expense Wages Expense If you were handed this book at the end of the month you would copy the total of each page onto either the Income Statement or the Balance Sheet..NOTE: The only page you would not use is the OWNERS-Drawing page ( It will appear on the Equity Statement) How each page has a $ total is in Chapter 2. What the student needs to know at this point is what goes on the Income Statement & what goes on the Balance Sheet. Please note that the transactions listed in the chapter are to prove A=L+EMeaning that no matter what happened the ASSETS will always = LIABILITIES + EQUITY.The column set up of the exhibit confuses many students.To repeat all you need to know at this point ---When you see an ACCOUNT name---on which statement does it go & where 4 POINT QUESTION TOWARDS FINAL GRADE : Above is a list of 13 ACCOUNTS-------Accounts Payable thru Wages Expense----If the total of each ACCOUNT is $5,000 what will be the NET INCOME ?