Following is an income statement calculated based on the different equity theories of accounting.

Entity Theory
Proprietary Theory Orthodox Unorthodox Residual Equity Theory
Revenues $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000
Less:
Operating Expenses
Cost of goods sold $400,000 $400,000 $400,000 $400,000
Depreciation $100,000 $100,000 $100,000 $100,000
Salaries and Wages $200,000 $200,000 $200,000 $200,000

Operating Income $ 30,000 $300,000 $300,000 $300,000
Less
Bond Interest $80,000 $80,000 $80,000
Dividend on Preferred Stock $30,000 $30,000
Dividend on Common Stock $100,000

Net Income $220,000 $300,000 $90,000 $190,000


The proprietary theory assumes that owners and the firm are virtually identical. The entity theory states that the firm and the owners are separate entities. The residual equity......

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Title: Eaquity Theories Of Accounting
Approximate Word Count: 266
Approximate Pages: 2 (250 words per double-spaced page)

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1. Eaquity Theories Of Accounting
   

   Eaquity Theories of Accounting. Following is an income statement calculated
   based on the different equity theories of accounting. ... ...