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). (We will use this company next week to create a balance sheet and cash flow statement.) 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. 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 350 words. The profit and loss statement can be included in your Word document or submitted in a separate Excel file. Conduct an internet search for an income statement template or use the example located in the textbook as a template for your income statement. In Chapter 3, on page 45, in Table 3.2 you will find an example of a profit and loss statement for one year or you can search the internet for an example. I will also provide an example in Course Questions of all three statements (income, balance sheet, and cash flow) to help you understand what we are doing the next two weeks.
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