When revenue totals more than expenses, net income is the result;
when expenses total more than revenue, there is a net loss.
• Owner's equity can be subdivided into four elements: capital, withdrawals, revenue, and expenses.
Withdrawals and expenses will decrease owner's equity.
Preparing an income statement, a statement Of owner's equity, and a balance sheet.
The income statement is a statement written for a specific period of time that lists earned revenue and expenses incurred to produce the earned revenue.