An Income Statement of a company is a financial statement that shows the company’s revenues and expenses during a specific accounting period. This statement reports the financial performance of the company. Copy the link given below and paste it in new browser window to get more information on Income Statement:- www.transtutors.com/homework-help/finance/income-statement.aspx

2. 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?

3. Income Statement Format

4. 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 assets
Increase in retained earnings
Increase in owners’ equity
Dividends result in:
Decrease in net assets
Decrease in retained
earnings
Decrease in owners’ equity

5. 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 Profit
Operating Income
Other Income/losses

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