What is Income Statement?
Summary of the revenue and expenses of a business entity giving information as to the results of operation for a specific period of time.
Elements of Income Statement
Income Statement- refers to the amount earned through services rendered or sale of merchandise.
Expenses- refer to the cost of goods or services that are used up in the operation of a particular business entity.
The basics of an Income Statement
Revenue- This is the amount you earned (or your sales), and any interests you have earned from those sales.
a.Service Revenue- Revenues earned by performing services for a customer or clients.
b.Sales- Revenues earned as a result of sale of merchandise.
Income Accounts
Service Income
Revenue from fees
Sales
Rent Income
Interest Income
Expenses
Cost of Sales- The cost incurred to purchase a material to make a product sold to customers during the period; also called cost of goods sold.
Expense Account
Advertising Expense
Travelling Expense
Salaries Expense
Tax Expense
Rent Expense
Supplies Expense
Utilities Expense
Transportation Expense Interest Expense
Repairs and Maintenance Expense
Insurance Expenses
Charitable Contribution expenses
Depreciation Expense
Tools Expense
Miscellaneous Expenses
Guidelines in Preparing Income Statement
a.The heading of the income statement is always written at the center of the first line statement
b.The expense accounts maybe arranged according to the magnitude or according to relative importance of the information to the user.
c.A peso sign is placed on the first amount in every mathematical operation and on the net income or net loss.
d.A single rule is drawn after every operation of addition and subtraction
e.A double rule is drawn after the net income or net loss.
Forms of an Income Statement Presentation
a.Single-step income statement
b.Multiple-step income statement
Equation use in net income or net loss in business
Income- expenses = net income or net loss
Purpose of Income Statement read more on:
The income statement shows which of the following?
How to compute income statement read more on:
