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ANSWER KEY

3. A customer of Fruit Packing, Inc. is no longer able to pay its bills. The amount to be written off as a loss is $1.9 million. What will the new ACCOUNTS RECEIVABLE amount be?
b) 21.8
23.7 - 1.9 = 21.8

4. This event will also affect an account on the other side of the Balance Sheet. What is this account? e) Retained Earnings

The value of the stockholder's equity is affected by a change in the value of an asset. This value is found in the RETAINED EARNINGS account.

5. What will the new amount of this account be?
e) 42.2
44.1 - 1.9 = 42.2

INCOME STATEMENT

Summary of operations and profitability

The Income Statement provides a summary of a company's operations and profitability over a given period of time (at the end of a month, quarter, or year). It shows the value of the products and services sold by the company for the reporting period, the costs incurred in achieving those sales, and the distribution of the residual income. The Income Statement provides an analyst with clues about the profitability of a company's operations.