

- Trending Categories
Data Structure
Networking
RDBMS
Operating System
Java
iOS
HTML
CSS
Android
Python
C Programming
C++
C#
MongoDB
MySQL
Javascript
PHP
- Selected Reading
- UPSC IAS Exams Notes
- Developer's Best Practices
- Questions and Answers
- Effective Resume Writing
- HR Interview Questions
- Computer Glossary
- Who is Who
Explain about income statement in accounting.
Income statement tells about firm’s revenues, expenses and profit/ loss in a period or an accounting year. In other words, it tells about firm’s probability in a particular period, it may be quarterly or annually. It is also called as profit and loss statement, revenue statement, statement of financial performance, earning statement, operating statement. The main purpose is to provide financial earnings of a firm for a specific period of time.
Types of income statements −
Single step income statement − Only one step is involved in this statement. That is, total revenue is subtracted from expenses.
Multiple step − Several steps are involved in this statement. Calculation of gross profit, then calculating operating expenses and then deducting from gross profits.
Components of income statements include −
- Revenue − Money generated from sales of goods/services.
- Cost of goods sold − Total amount for producing the goods, which includes material, labour and other necessary components.
- Gross profit − Divergence between revenue and cost of goods sold.
- Operating expenses − Amount spend to maintain and operate the business, which includes R&D, marketing, administrative expenses, amortisation etc.
- Operating income − Revenue minus goods sold and operating expenses.
- Other income/expenses − Income tax expenses, interest income etc.
- Profits − Revenue minus all expenses.
Formula
- Gross profit = R – CGS
- Operating income = G – OP
- Net income = OI + NOI
= (R + NOI) – (CGS + OP)
Here R = revenue, CGS = Cost of goods sold, G = Gross profit, OP= operating expenses, OI = operating income, NOI = Non – Operating items, OI = Operating income
General format of income statement is as follows −
Debit (currency) | Credit (Currency) | |
---|---|---|
Income statement of a ABC For year end Dec 31st XXX | ||
Revenues (A) | ||
Gross revenues | XXXX | |
Expense (B) | ||
Advertising | XXX | |
Insurance | XXX | |
Rent | XXX | |
Other expneses | XXX | |
Total (A-B) | XXXX |
- Related Questions & Answers
- Explain about single step income statement in accounting with example.
- Explain about balance sheet in accounting.
- Explain about straight line depreciation in accounting.
- Explain about Double-declining balance method in accounting.
- Explain about types of accounting and its golden rules.
- Describe about systems of accounting.
- Explain accounting period in finance and accounting.
- Describe about net income approach in capital structure.
- Explain cash based accounting.
- How can I get the information about a particular column of a table by MySQL EXPLAIN statement? EXPLAIN statement?
- What is difference between balance sheet and income statement?
- Explain about financial strategy.
- Explain about Transfer pricing
- Explain Net operating income theory of capital structure.
- Explain about Varargs in java?