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.

• 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.

• Special Reporting

  • Special, or irregular, items appear on single step or multi-step income statements, and require special reporting procedures.
  • The earnings per share can appear on the income statement or in the notes to the income statement.
  • GAAP) whenever comparative balance sheets and income statements are presented.
  • It may appear in the balance sheet, in a combined income and changes in retained earnings statement, or as a separate schedule.
  • In essence, the statement of retained earnings uses information from the income statement and provides information to the balance sheet.

• 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.

• 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.

• Impact of the Operating Cycle on the Income Statement

  • The accrual method ensures proper reporting on the income statement because the operating cycle doesn't coincide with the accounting cycle.
  • The income statement is one component of the financial statements for a company.
  • The income statement reports the profitability of a business organization for a stated period, such as a month or a year.
  • Information enters the income statement via the accounting cycle.
  • In that case, the financial statements, including the income statement, will not be accurate.

• Income Statement Analyses

  • The income statement indicates how the revenue is transformed into net income and can provide many insights to a company's performance.
  • Income statement (also referred to as profit and loss statement (P&L), revenue statement, statement of financial performance, earnings statement, operating statement or statement of operations) is a company's financial statement that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as Net Profit or the "bottom line").
  • 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 important thing to remember about an income statement is that it represents a period of time.
  • Explain how the different formulas are used on the income statement to show a company's performance

• 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.

• Introduction to the Statement of Cash Flows

  • The income statement is accrual based.
  • It shows net income, which is calculated as follows: revenues earned minus the expenses incurred in order to earn those revenues.
  • The Statement of Cash Flows is composed of three sections:
  • The statement of cash flows shows the liquidity of a company.
  • Describe the effect operating, investing and financing activities have on the statement of cash flows, and how that statement differs from the income statement

• Financial Statement Notes

  • While the Income Statement, Balance Sheet, Cash Flow Statement, and Statement of Retained Earning contain all numeric information about the company, these numbers often require a better explanation.
  • Notes to financial statements are added to the end of financial statements.
  • The notes clarify individual line items on the various statements.
  • For example, if a company lists a loss on a fixed asset impairment line in their income statement, notes could corroborate the reason for the impairment by describing how the asset became impaired.
  • Notes on the financial statements convey specific information about the line-items on the statement.