this is all one question.

Accounting is supposed to be about recording, analyzing and presenting relevant business information in a standardized way. Standardization is important so that anyone can read any company's financial statement and understand its condition. These rules are called Generally Accepted Accounting Principles (GAAP). The problem is that there are so many options within accounting rules that no two financial statements are exactly alike. a. 1. Generally Accepted Accounting Principles (GAAP) requires four financial statements plus footnotes. Income Statement, which is also called the Earnings Statement, Consolidated Income or Earnings Statement or Statement of Operations. b. Balance Sheet, which is a list of a company's assets, liabilities and equity. Assets must equal liabilities plus equity. This is the accounting equation. The Balance Sheet may be called the Consolidated Balance Sheet. Statement of Retained Earnings-ties together the income Statement and Balance Sheet. d. Statement of Cash Flows - identifies where cash comes from and where it goes. C. 2. Sales, Net Sales and Revenue all mean the same thing when analyzing financial statements. 3. Credit Sales vs. Cash Sales - When a business (B) sells to another business (B), it almost always sells on credit, so all B to B sales can be considered credit sales. When a business (B) sells to consumers (C) it is almost always a cash (or cash equivalent) sale. So, B to C sales can be considered cash sales. If you know who a company's customers are (B or C) you can tell whether sales are cash sales or credit sales. 4. Cost of Goods Sold (COGS), Cost of Products, Cost of Sales, and cost of Services all mean the same thing. 5. Gross profit is a subtotal. It is Sales less COGS. Not every financial statement has a Gross profit subtotal. If it doesn't have one, supply one as part of reformatting. 6. Earnings Before Interest & Taxes (EBIT) is a subtotal. It is Gross profit less Total Overhead. EBIT is sometimes called Operating Income. 7. Overhead is everything between the subtotal Gross profit and EBIT (or operating income). 8. Selling & Marketing costs are called by various names. Not every company breaks out selling and marketing costs separately. If some means can't be found to separate out selling and marketing costs, Selling Cost%, and Other Overhead% cannot be calculated. Other Overhead is all Overhead except Selling and Marketing Costs. 9. Interest is interest net. It interest expense less interest income. 10. Taxes can be called Provision for Tax Income Tax Expense, or simply Taxes. Module IV Income Statement interpretation Page 2 of 4 NO NEED TO TURN IN PRE-PRINTED INFORMATION JUST THE ANSWER SHEET 11. Earnings before Taxes (EBT) is taxable income. It can be called various things. The way to locate earnings before taxes is to find the Tax line in the income statement and look up to the previous line, 12. Net Income is a little tricky. Usually Net Income represents the amount of profit after all expenses have been paid. But it generally means a little more than this. It is also an indicator of how much profit a company expects to make year after year. a Discontinued Operation - Sometimes companies have income from operations they have sold or closed. This income is stated on a separate line and labeled Income for loss) from discontinued operations. If a company has discontinued operations, look to the subtotal above this to find Income from Continuing Operations or Earnings from Continuing Operations. Use this in lieu of Net Income for financial analysis. b. Extraordinary items - Sometimes a company experiences an event that is both unusual and infrequent that creates either additional one-time income or more often a one-time loss. These are called extraordinary items. Such items are stated on a separate line. When a company has extraordinary iteris, look to the subtotal above it to find income from Continuing Operations or Earning from Continuing Operations. Use this instead of Net Income in the financial analysis rather than Net Income. 13. The Balance Sheet, statement of Retained Earnings and statement of Cash Flow are not discussed in this module. 14. Income Statement - Find landmarks in company's income statement and reformat it as follows before attempting a financial analysis MODEL INCOME STATEMENT Sales Less COGS Gross Profit 1,000 Landmark 1 Sales (Revenue) __600 Landmark 2 COGS (COS OF COP) 400 Landmark #3 Gross Profit (Sales COGS) Less Overhead Selling & Marketing Expense Other Overhead Total Overhead 100 Landmark 4 Selling & Mktg Exp. 200 Landmark #5 Other Overhead 300 Landmark #6 Total Overhead Earnings Before Interest & Taxes 100 Landmark #7 EBIT (Operating income) Interest (net) Earnings before Taxes 10 Landmark interest Net (Int.Exp-in 90 Landmark 9 EBT Taxes Net Income 30 Landmark #10 Income Taxes 60 Landmark N11 Net Income Module IV Income Statement interpretation Page 3 of 4 - NO NEED TO TURN IN PRE-PRINTED INFORMATION JUST THE ANSWER SHEET INDUSTRIAL EQUIP 2013 2012 INCOME STATEMENT (Millions) Revenue COGS Gross Profit BRICK CORPORATION 2013 2012 2,500 2,300 1520 1,450 980 850 STATEMENT OF OPERATIONS Millions) Sales Sales Eastern US Sales Western US Sales Canada Total Sales Cost of Goods Sold COGS Eastern US COGS Western US COGS Canada Totalcoos 300 260 40 600 220 30 550 160 160 100 20 310 110 Selling/Marketing Research Corp. Facilities Restructuring Exec. Salaries Fleet Lenses CUIT 200 25 100 60 150 50 355 245 15 100 60 135 10 280 50 200 38 R$ 99 ******* ******** ale ******** Commissions Other Selling & Marketing Corporate Office Facilities Non Selling Non Marketing Sales Other Corporate Costs Operating Income 18 12 10 30 SO 305 20 15 10 30 10 175 Interest, et Pre-Tax Earnings 40 165 95 55 40 160 Provision for Takes Income from Continuing Operations 210 110 Intorout Expence Interest income Earnings Before Taces 12 2 165 12 2 150 Loss on Discontinued Ops Gain on sale of Dise. Ops Extraordinary item Gain flow) Net income SO 10 30 140 5 10 da 155 Income Taxes Net Income 55 110 45 105 OTHER INFORMATION Sells machinery to factors Preferred stock Dividend 7% Preferred stock value Deprecation Amortization Depletion 10 OTHER INFORMATION Sells electronics to factories Preferred stock Dividend 12 Preferred stock values Depreciation Amortization Depletion 20 meste 8 2 Amortization Depletion President's Bonus 0 Amortization Depletion President's Bonus 2 David Vance Copyright 2018 Outstanding Shares 15 50 Outstanding Shares Find landmarks 1 to 11 in the financial statements for industrial Equipment, Inc. and Brick Corporation and reformat their income statements using the Model Income Statement format. *** ONLY SUBMIT ANSWER SHEETS - NOT ALL THE PRE-PRINTED FACTS INCOME STATEMENT (Millions) Sales Industrial Equipment 2013 2012 Brick Corp. 2013 2012 COGS Gross Profit Selling & Marketing Other Overhead Total Overhead Operating Income Interest Net EBT Taxes Net Income