income statement

Examples of income statement in the following topics:

• Introduction to the Income Statement

  • The income statement shows revenues and expenses for a specific period.
  • The income statement is prepared on an accrual basis.
  • The income statement is also referred to as a "profit and loss statement" (P&L), revenue statement, statement of financial performance, earnings statement, operating statement and statement of operations.
  • There are two types of income statement, a single-step income statement and a multi-step income statement.
  • The multi-step income statement is more complex.

• Uses of the Income Statement

  • The purpose of the income statement is to show managers and investors whether the company was profitable during the period being reported.
  • The income statement, sometimes referred to as a profit & loss statement, reflects the revenues and expenses for a specific period of time.
  • The primary purpose of the income statement is to show managers and investors whether the company was profitable during the period being reported.
  • In addition to tracking revenue, the income statement can compare expenses from year to year, indicating a firm's success in controlling costs.
  • Explain how interested parties use the income statement to assess a company's profitability

• Defining the Income Statement

  • Income statement is a company's financial statement that indicates how the revenue is transformed into the net income.
  • The important thing to remember about an income statement is that it represents a period of time.
  • The income statement can be prepared in one of two methods.
  • In addition to the Single and Multi-step methods, the income statement can be reported on a cash or accrual basis.
  • Guidelines for statements of comprehensive income and income statements of business entities are formulated by the International Accounting Standards Board and numerous country-specific organizations, for example the FASB in the U.S.

• Income Statement Formats

  • An income statements may also be referred to as a profit and loss statement (P&L), revenue statement, statement of financial performance, earnings statement, operating statement or statement of operations.
  • The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported.
  • The income statement is used to assess profitability, as the expenses for the period are deducted from the revenues.
  • Thus, the balance sheet has a direct relation with the income statement.
  • However, information of an income statement has several limitations: items that might be relevant but cannot be reliably measured are often not reported.

• Relationships Between Statements

  • The four most common financial statements are the balance sheet, income statement, statement of cash flows and the statement of stockholder's equity.
  • The income statement, specifically, net income reconciles the beginning (prior ending period) balance sheet to the current balance sheet.
  • The statement of shareholder's equity connects the income statement and the balance sheet.
  • A clean surplus occurs when all changes in the balance sheet are reconciled by the income statement.
  • Comprehensive income is reported on the statement of changes in shareholder's equity.

• Comparing Statement of Cash Flows with the Income Statement

  • While the income statement focuses on a firm's profitability, the statement of cash flows focuses on a firm's solvency.
  • However, while the income statement focuses on profitability, the statement of cash flows focuses on solvency.
  • The income statement reports the profitability of a company over a stated period of time.
  • However, information of an income statement has several limitations.
  • Describe how a company would use an income statement versus how they would use a statement of cash flows

• The Statement of Equity

  • The statement of equity (and similarly the equity statement, statement of owner's equity for a single proprietorship, statement of partner's equity for a partnership, and statement of retained earnings and stockholders' equity for a corporation) are basic financial statements.
  • GAAP whenever comparative balance sheets and income statements are presented .
  • It may appear in the balance sheet, in a combined income statement and changes in retained earnings statement, or as a separate schedule.
  • Therefore, the statement of retained earnings uses information from the income statement and provides information to the balance sheet.
  • The statement of retained earnings uses information from the income statement and provides information to the balance sheet.

• Introduction to the Retained Earning Statement

  • GAAP) requires a statement of retained earnings to be prepared whenever comparative balance sheets and income statements are presented.
  • Comprehensive income is the sum of net income and other items that must bypass the income statement because they have not been realized, including items like an unrealized holding gain or loss from available for sale securities and foreign currency translation gains or losses.
  • The retained earnings statement may appear in the balance sheet, in a combined income statement and changes in retained earnings statement, or as a separate schedule.
  • The statement of shareholder's equity uses information from the income statement and provides information to the balance sheet.
  • The statement of retained earnings uses information from the income statement and provides information to the balance sheet.

• Defining the Financial Statement

  • Financial statements report on a company's income, cash flow and equity.
  • An entity's financial statement typically includes four basic components: a balance sheet, income statement, cash flow statement, and statement of changes in equity:
  • An income statement reports on a company's expenses and profits to show whether the company made or lost money.
  • In contrast with the balance sheet, which represents a single moment in time, the income statement represents a period of time
  • A cash flow statement shows how changes in income affect cash and cash equivalents, breaking the analysis down to operating, investing and financing.

• Outputs of Accounting

  • These statements are as follows:
  • This statement, also referred to as profit and loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time.
  • The notes typically provide detail for items on the balance sheet, income statement, and cash flow statement.
  • Notes to financial statements are considered an integral part of the financial statements.
  • Reported assets, liabilities, equity, income, and expenses are directly related to an organization's financial position.