REVIEW AND DISCUSSION QUESTIONS

4. What is the primary difference between the income statement of

a sole proprietorship or partnership and the income statement of a

corporation?

-There are a few differences between the income statement of

a sole proprietorship or partnership and the income statement of a

corporation. A major difference is that the income statement of a sole proprietorship will not report income tax expense, since the owner is responsible for U.S. income taxes. A regular corporation is a taxpaying entity and it is responsible for U.S. income taxes. Another difference is ill not report any salary expense for the sole proprietor who works in the business, but if its a regular corporation, the income statement will report as salary expense the amount that the stockholder earned by working in the business.

5. What is a personal statement of financial position?

-It is a document or spreadsheet outlining an individual's financial position at a given point in time. A personal financial statement will typically include general information about the individual, such as name and address, along with a breakdown of their total assets and liabilities.

6. What is the difference between the time periods listed on an income statement and on a balance sheet?

-A balance sheet often states that it is prepared as of a specific date, referred to as the balance sheet date; it is a statement of financial position at a given point of time. The income statement