Chapter 1 — Foundations & The Accounting Equation

Profit Builder

Learning Outcome Covered: 1.4d

Build the Income Statement

📈 Revenue
📉 Expenses
💰 Profit

🎯 Objective

Place each revenue and expense in the correct section to build a complete Income Statement and calculate Net Income.

📋 How to Play

  1. Tap a piece to select it — the drop zones will highlight in blue
  2. Tap inside a blue area to place it in Revenues or Expenses
  3. Watch the totals update automatically
  4. Avoid placing wrong accounts (Assets, Liabilities, Equity)
  5. Tap a placed item to remove it
⭐ How stars work: 3 stars = you passed with no mistakes · 2 stars = you passed · 1 star = you finished, but did not pass.

📚 Building the Income Statement

📈 Revenues

The Income Statement shows profit or loss for a period. Revenue accounts represent money earned from business operations.

  • Service Revenue - earned from providing services
  • Sales Revenue - earned from selling products

📉 Expenses

Expense accounts represent costs incurred to generate revenue during the period.

  • Salaries Expense - employee wages
  • Rent Expense - cost of leasing space
  • Utilities Expense - electricity, water, gas
  • Advertising Expense, Insurance Expense, Supplies Expense, Depreciation Expense - other operating costs

🏗️ The Structure

    COMPANY NAME
    Income Statement
    For Month Ended Date

REVENUES:
    Service Revenue         $XX,XXX
    Sales Revenue            X,XXX
    Total Revenues                   $XX,XXX

EXPENSES:
    Salaries Expense        $X,XXX
    Rent Expense             X,XXX
    Utilities Expense          XXX
    Total Expenses                    X,XXX

NET INCOME                           $X,XXX

🚫 Watch Out for Wrong Accounts

These items do NOT belong on the Income Statement:

  • Assets - Cash, Equipment, Supplies, Accounts Receivable
  • Prepaid Insurance, Prepaid Rent - Assets, paid ahead
  • Liabilities - Accounts Payable, Notes Payable, Unearned Revenue
  • Equity - Common Stock, Retained Earnings, Dividends
Section What Goes Here
Revenues Service Revenue, Sales Revenue
Expenses All expense accounts
Net Income Total Revenues - Total Expenses

💡 Key Formula

Net Income = Total Revenues - Total Expenses

Example: Service Revenue $10,000 minus Expenses $6,500 = Net Income of $3,500

Round
1/10
Score
0
🔥 0
Place items in the correct sections.
Company Name
Income Statement
For the Month Ended
REVENUES:
Total Revenues $0
EXPENSES:
Total Expenses $0
NET INCOME $0
Available Items

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