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e. Activity 1 - Income Statement Purpose: Understand the information reported on the income statement. Identify revenue and expense accounts reported on the income statement Cool Lope, Inc. - Tropical Smoothies and Shaved Ice Cool Lope, Inc. Consolidated Statements of Earnings For the Years Ended December 31, 20X3, 20X2, 20X1 C. 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 (Rev), expense (Exp), or not reported (Not) on the income statement. Advertising expense (Rev / Exp/Not) d. Service revenue (Rev/Exp/Not) b. Inventory (Rev / Exp/Not) Rent expense (Rev/Exp/Not) Cost of goods sold (Rev / Exp/Not) f. Building (Rev / Exp/Not) Q2 Review Cool Lope, Inc. income statement above and answer the following questions: 1. Is the income statement for Cool Lope, Inc. a (Single-Step or Multi-Step) version of the income statement? 2. In 20x3 Cool Lope, Inc. sold products to customers for $ _that cost the company $ to produce. 3. The first expense for Cool Lope, Inc. that helps to determine the gross profit or how much profit the firm is generating after the cost of products or services is Operating Expenses / Cost of Goods Sold / Research and Development). 4. The title of the largest expense account is reporting $ which is typically the largest expense account for a company within the (retail / service) industry 5. Was Cool Lope, Inc. profitable? (Yes/No) How much profit was reported? $_ Q3 Net income can also be referred to as (revenues / expenses / common stock/ earnings). 20x3 20X2 20X1 Net sales $21,560 $16,400 $15,180 Cost of goods sold $12.946 $10.207 $9.670 Gross profit $8,614 $6,103 $5,510 Selling and administrative expenses $4,572 $3,349 33,276 Advertising $1,425 $1,079 $954 Depreciation and amortization $250 $250 $250 Operating profit $2,218 $1,377 $1,030 Other income (expense) Now: Examine the annual report for the company you have selected for your "Financial Statement Analysis Report," and answer the following questions for the most recent year provided in the financial statements. 1. What is the total revenue? Gross profit? Interest expense (5130) (5130) (5130) $2,348 $1,507 $1,160 Earnings before income taxes Provision for income taxes Net earnings $517 $332 $255 2. What was total expenses? $1.831 S1.17 $005 3. What was the largest expense for your company? Why do you think that is? 4. Do they pay interest? If yes, what is the total for interest expense? The income statement reports the company's profitability or results of operations during an accounting period. Revenues are amounts received from customers for products sold and services provided. Expenses are the costs incurred to produce revenues. These represent the "Run the Business" expenses. Expenses are recorded in the accounting period they benefit. Cost of goods sold expense reports the wholesale costs of inventory sold to customers during the accounting period. 5. What is the amount of depreciation? What method did they use to calculate depreciation