income statement | finance
TRANSCRIPT
INCOME
STATEMENT
THE INCOME STATEMENT
Shows the results of a company’s operations over a period of time.
What goods were sold or services performed that provided revenue
for the company?
What costs were incurred in normal operations to generate these
revenues?
What are the earnings or company profit?
Income Statement Format
An additional financial statement that identifies changes in retained earnings from one accounting period to the next.
STATEMENT OF RETAINED EARNINGS
Beginning retained earnings+ Net income– Dividends paid
= Ending retained earnings
Net income results in:Increase in net assetsIncrease in retained earningsIncrease in owners’ equity
Dividends result in:Decrease in net assetsDecrease in retained
earningsDecrease in owners’ equity
Income Statement
• Single-step• All operating revenues and gains are reported first,
followed by all operating expenses and other losses.• No separate section is prepared for COGS and gross
profit.
• Multiple-step• Divided into separate sections, various subtotals are
reported.• Involves separate sections for gross profit, operating
income, other income/losses, income before income taxes, and net income.
Gross ProfitOperating
IncomeOther Income/losses
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