Please answerQ1,Q2,Q3

ACTIVITY 4 INCOME STATEMENT Purpose: Understand the information reported on the income statement. dentify revenue and expense accounts reported on the income statement. PEPsico (PEP) 2010 INcoMESTATEMENT (Sin millions) Sales revenue 57,838 Cost of goods sold Gross profit 31,263 Selling, general and administrative (SGA) expense 22,326 Research and development expense other operating expenses Income before income tax 8,232 Provision for income tax 1.912 Net income 6,320 The income statement reports the company's profitability during an accounting period. Revenues are amounts received from customers for products sold and services provided. Sales revenue and service revenue are amounts earned engaging in the primary business activity Expenses are the costs incurred to produce revenues. Expenses are recorded in the accounting period they benefit (if a cause and effect relationship exists) or are incurred (if there is no cause and effect relationship). Cost of goods sold expense reports the wholesale costs of inventory sold to customers during the accounting period. Net income is the difference between revenues and expenses. Net income is also referred to as profit (loss), earnings, or the bottom line. Revenues Expenses Net income Q1 Circle whether the account is classified as a (Revenue, Exp)ense, or (Not) reported on the income statement. d. Service revenue (Rev/Exp /Not) a. Wage expense (Rev Exp Not) e. Rent expense (Rev Exp /Not) (Rev Exp/Not) b. Inventory (Rev Exp Not) Building c. Cost of goods sold (Rev/Exp Not) Q2 Review PepsiCo's 2010 income statement above and answer the following questions: a. This company reports (1/2/3/4) revenue account s) and (2/3/4/5) expense accounts. million that cost the b, Beverages and snacks were sold to customers for company million to produce. c. The title of the largest expense account is reporting million, which is typically the largest expense account for a company within the (retail service) industry. What specific types of costs would be included in this account for PepsiCo? d, was PepsiCo profitable? Yes/No) How much profit was reported? million Q3 Net income can also be referred to as (revenues/expenses common stock earnings). Chapter 1 Page 19