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 −
= (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|