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    Income Statement A.K.A. Profit and Loss Statement

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    Lovely Mae Manuel Lacaste
    The document discusses an income statement, also known as a profit and loss statement. It shows a company's revenues and expenses for a period of time, such as a year, and the resulting net income or loss. An example income statement is provided for a sole proprietorship business. Key elements include the company name, period covered, income accounts listed before expenses, and the net income or loss computed at the bottom.

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    Income Statement A.K.A. Profit and Loss Statement

    Uploaded by

    Lovely Mae Manuel Lacaste
    61 views9 pages
    The document discusses an income statement, also known as a profit and loss statement. It shows a company's revenues and expenses for a period of time, such as a year, and the resulting net income or loss. An example income statement is provided for a sole proprietorship business. Key elements include the company name, period covered, income accounts listed before expenses, and the net income or loss computed at the bottom.

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    Income Statement

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    The document discusses an income statement, also known as a profit and loss statement. It shows a company's revenues and expenses for a period of time, such as a year, and the resulting net income or loss. An example income statement is provided for a sole proprietorship business. Key elements include the company name, period covered, income accounts listed before expenses, and the net income or loss computed at the bottom.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    61 views9 pages

    Income Statement A.K.A. Profit and Loss Statement

    Uploaded by

    Lovely Mae Manuel Lacaste
    The document discusses an income statement, also known as a profit and loss statement. It shows a company's revenues and expenses for a period of time, such as a year, and the resulting net income or loss. An example income statement is provided for a sole proprietorship business. Key elements include the company name, period covered, income accounts listed before expenses, and the net income or loss computed at the bottom.

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    Income Statement


    a.k.a. Profit and Loss
    Statement

     The Income Statement, also referred to as Profit and
    Loss (P&L) Statement, shows an entity's results of
    operations for a particular period.

     It presents an entity's revenues and expenses, and


    the resulting net income or net loss.
    Income Statement Example

    Here is a sample income statement of a
    service type sole proprietorship
    business. Let us name the company
    Strauss Printing Services. All amounts
    are assumed and simplified for
    illustration purposes.

    Explanation and Pointers

     An income statement shows the net income or net loss of a business.
    This is achieved by deducting all expenses from all income.
     A typical income statement starts with a heading which consists of
    three lines. The first line presents the name of the company; the second
    describes the title of the report; and the third states the period covered
    in the report.
     Notice that the third line is worded "For the Year Ended..." This means
    that the income statement presents information for a specific span of
    time. In the above example, the period covers 1 year that ends on
    December 31, 2019. Hence, the amounts presented in the report are
    income and expenses from January 1, 2019 to December 31, 2019.
     Income accounts are presented before expenses. In the above
    statement, the income account is Service Revenue. Other income
    accounts for service type businesses include Professional Fees, Rent
    Income, Tuition Fees, etc.
    Explanation and Pointers

     Expenses are presented after the income accounts. It is a good practice to
    arrange expenses according to amount (largest to smallest). Some users who are
    interested in the company's expenses are concerned about the size of each
    expense. Arranging the expenses from largest to smallest results in a more
    useful and organized report. Nonetheless, Miscellaneous Expense or Sundry
    Expense is presented last.
     If income exceeds expenses, there is a net income. If expenses exceed income,
    there is a net loss. Notice how computations are presented. A single line is
    drawn every time an amount is computed. The resulting amount is double-
    ruled when it is no longer followed by any operation. For example, $57,100 (net
    income).
     The income statement complies with the accrual basis of accounting. Income is
    recognized when earned regardless of when collected. Expenses are recognized
    when incurred regardless of when paid.
     This means that income and expenses presented in the income statement have
    been earned and incurred, respectively. Nonetheless, it does not mean that they
    have all been collected or paid.
    Explanation and Pointers

     International accounting standards suggest that companies should
    present other comprehensive income in their financial statements. A
    Statement of Comprehensive Income shows the contents of an income
    statement followed by a list of "other comprehensive income".
     Other comprehensive income includes gains and losses that cannot be
    reported as profit and loss, such as unrealized gains and losses, and
    revaluation surplus. This is taken up in higher financial accounting
    studies.
     When the company does not have other comprehensive income, the
    contents of the income statement and the statement of comprehensive
    income are the same. In any case, international accounting standards
    favor the use of the title "Statement of Comprehensive Income".
    Statement of
    Comprehensive Income

     Here's a sample Statement of Comprehensive
    Income, which includes other comprehensive
    income. This topic is taken up in higher accounting
    so you need not worry about it yet.

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