# Day 51-52

#### After studying Chapter 7, you will be able to:

• Define accounting terms related to financial statements for a service business organized as a proprietorship.
• Identify accounting concepts and practices related to preparation of financial statements for a service business organized as a proprietorship.
• Prepare an income statement for a service business organized as a proprietorship and analyze an income statement using component percentages.
• Prepare a balance sheet for a service business organized as a proprietorship.

#### Mastery Problem 7-3

1. Make a copy of this spreadsheet.
2. Place this file in your Chapter 7 folder.
3. Rename the file to Mastery Problem 7-3-(Your Initials)
4. Complete the spreadsheet according to the directions on page 195 or below.

#### Challenge Problem 7-4

1. Make a copy of this spreadsheet.
2. Place this file in your Chapter 7 folder.
3. Rename the file to Challenge Problem 7-4-(Your Initials)
4. Complete the spreadsheet according to the directions on page 196 or below.

#### Graphing Workshop

1. The net income figures for three companies for three years are given below.
•  Company 2005 2006 2007 Atlas Company 15,000 17,000 14,000 Mertzel Company 13,000 15,000 17,000 Tampeau Company 16,000 14,000 13,000
3. Enter the numbers show above and then develop a graph that will best illustrate the difference in the net income for each company each year.  Decide for yourself which type of graph to use.

#### Analyzing Best Buy’s Financial Statements

1. Best Buy’s financial reports include a consolidated statement of earnings, which is shown in Appendix B page B-6.  This statement reports revenue, expenses, and operating income similar to an income statement for a proprietorship. Best Buy’s statement of earnings is more complex than the income statement described in this chapter.  Besides reporting net income (called net earnings), it also reports “Earnings from continuing operations.”  The difference between these two amounts is caused by discontinuing or selling a portion of the company or because of changes in accounting procedures.Create a new Google Document titled Best Buys Financial Statements-(Your Initials) and then answer the following questions using Appendix B:
1. What are Best Buy’s net earnings for each of the three years?
2. What are Best Buy’s earnings from continuing operations for each of the three years?
3. Note 2 to the financial statements is on page B-20.  Note 2 tells about discontinuing or selling a portion of the company.  Read Note 2.  What portion of the company was sold that caused the difference between net earnings and earnings from continuing operations in 2004?

#### Study Guide 7

1. Complete this Chapter 7 Study Guide to assess your learning from Chapter 7. You have as many attempts as needed to get as good of a score as you can.