(Optional) Create a basic income statement and a basic balance sheet.

Creation of a basic income statement should include

  • recording revenue
  • determining cost of sales
  • recording expenses
  • calculating net income or net loss.

Creation of a basic balance sheet should include

  • assets, including accounts receivable
  • liabilities, including accounts payable
  • owners’ equity.

Process/Skill Questions:

  • Why are accurate financial records important?
  • What are the potential consequences of not tracking expenses?
  • What are the advantages and disadvantages of using software to track business records? What software packages are popular with businesses today?
  • How often should a business complete an income statement? A balance sheet?
  • What is the function of an income statement?
  • What are possible consequences of a business neglecting to generate an income statement?
  • What is the difference between an asset and a liability?
  • How should a company track business assets?
  • What valuable information can profit and loss statements provide?