BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -The income statement of the sole proprietorship does not report as an expense any salary or wages for the owner working in the business.

Detailed explanation-2: -Since the drawing account is not an expense, it does not show up on the income statement of the business.

Detailed explanation-3: -As a result, the income statement for the sole proprietorship business does not include an expense for the owner working in the business. This means that the reported net income is the total return for the owner’s work and investment.

Detailed explanation-4: -Unearned fees and prepaid expenses are not classified as costs of the period, and therefore, do not appear in the income statement. The net loss appears in the income statement and it shows the amount by which the company’s costs exceed its revenues.

Detailed explanation-5: -An owner’s drawing is not a business expense, so it doesn’t appear on the company’s income statement, and thus it doesn’t affect the company’s net income. Sole proprietorships and partnerships don’t pay taxes on their profits; any profit the business makes is reported as income on the owners’ personal tax returns.