Answer:
The income statement shows financial performance and includes revenues and expenses, but the example provided contains balance sheet items. To create an income statement, subtract COGS and all operating expenses from service revenue.
Step-by-step explanation:
The income statement is a financial report that shows a company's financial performance over a specific period, typically one fiscal year. It includes revenues, expenses, gains, and losses. However, the question seems to contain irrelevant or incorrect items for an income statement such as 'Cash plus equipment' and 'Buildings minus supplies' which are more related to the balance sheet.
Example Income Statement Structure
1. Operating Revenues
-Service Revenue
2. Operating Expenses
-Cost of Goods Sold
-Delivery Expense
-Other Operating Expenses
3. Net Income (or Loss)
Net Income = Service Revenue - (Cost of Goods Sold + Delivery Expense + Other Operating Expenses)
To accurately prepare an income statement for Longhorn Corporation, we need to follow the three main components:
Service Revenue - which is the total amount earned from providing services before any costs or expenses are deducted.
Cost of Goods Sold (COGS) - which represents the direct costs attributable to the production of the goods sold by the company.
Operating Expenses - category may include delivery expense, but not accounts payable, which is a liability and not an expense.
Correctly preparing an income statement involves subtracting the cost of goods sold and all operating expenses from service revenue to calculate the net income or net loss.