Purpose of Assignment :
The purpose of this assignment is to allow students to gain the necessary knowledge to manage cost and determine project viability through capital budgeting techniques, so they can effectively minimize the cumulative error between the projected values and actual values over the relevant time horizon. We will prepare a simple Income Statement.
Note: The official term Income Statement is also known informally as Profit and Loss Statement.
Assignment Steps:
Create a simple Profit and Loss Statement for the first two years of your dream company following the income statement format. (This is to be created from scratch for the first two years of your own company, do not copy a company from the internet).
Explain how you calculated revenue for year one (I want to see the numbers you use) and then explain how it changes for year two.
Explain how cost of goods sold (if required, service companies may not have COGS), and operating expenses (list all the accounts you use for expenses) are calculated for year one and explain changes for each account in order to report the year two numbers.
Analyze the revenue items based on information collected and make adjustments. The start for your income statement is calculating revenue. Make adjustments for cost of goods sold and expenses based on revenue estimates. Explain how you calculated cost of goods sold and expenses. Show calculations In the excel file and word document.
Provide calculations and explanations for how you calculated revenue, cost of goods sold (if required), and operating expenses (show each expense) in a Word document of at least 550 words. Create a Profit and Loss Statement following the income statement format. Create a Profit and Loss Statement explaining assumptions.
Include the profit and loss statement in a Word document and in a separate Excel file.
Conduct an internet search for an income statement template. I attached a file that has more detailed directions and a template for you to use. Please include all of the information and submit them on a word document and in an excel file, thanks!
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