Income Statement

• Income Statement

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Income statement

1 An 'income statement' (US English) or 'profit and loss account' (UK

English)Professional English in Use - Finance, Cambridge University Press,

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Income statement

1 period, and the cost and expenses charged against these revenues,

including write-offs (e.g., depreciation and amortization of various assets) and taxes. The

purpose of the income statement is to show Management|managers and

investors whether the company made or lost money during the

period being reported.https://store.theartofservice.com/the-income-statement-toolkit.html

Income statement

1 One important thing to remember about an income statement is that it represents a period of time like the cash flow statement. This contrasts

with the balance sheet, which represents a single moment in time.


Income statement

1 Charitable organizations that are required to publish financial

statements do not produce an income statement


Income statement

1 The more complex Multi-Step income statement (as the name implies) takes several steps to find the

bottom line, starting with the gross profit


Income statement - Usefulness and limitations of income statement

1 Income statements should help investors and creditors determine the

past financial performance of the enterprise, predict future

performance, and assess the capability of generating future cash flows through report of the income

and expenses.



1 Guidelines for statements of comprehensive income and income statements of business entities are

formulated by the International Accounting Standards Board and

numerous country-specific organizations, for example the FASB

in the U.S..



1 Names and usage of different accounts in the income statement

depend on the type of organization, industry practices and the requirements of different

jurisdictions.



1 If applicable to the business, summary values for the following items should be included in the

income statement:[http://www.iasplus.com/st

andard/ias01.htm Presentation of Financial Statements] International

Accounting Standards Board. Accessed 17 July 2010.


Income statement - Operating section

1 Expenses recognised in the income statement should be analysed either by 'nature' (raw materials, transport costs, staffing costs, depreciation, employee

benefit etc.) or by 'function' (cost of sales, selling, administrative, etc.). (IAS 1.99) If an

entity categorises by function, then additional information on the nature of

expenses, at least, – depreciation, amortisation and employee benefits expense

– must be disclosed. (IAS 1.104)


Income statement - Irregular items

1 'No' items may be presented in the income statement as 'extraordinary items' under

IFRS regulations, but are permissible under US GAAP. (IAS 1.87) Extraordinary items are both unusual (abnormal) and infrequent, for

example, unexpected natural disaster, expropriation, prohibitions under new

regulations. [Note: natural disaster might not qualify depending on location (e.g. frost damage would not qualify in Canada but

would in the tropics).]


Income statement - Earnings per share

1 Because of its importance, earnings per share (EPS) are required to be

disclosed on the face of the income statement. A company which reports any of the irregular items must also report EPS for these items either in

the statement or in the notes.


Income statement - Sample income statement

1 The following income statement is a very brief example prepared in

accordance with IFRS. It does not show all possible kinds of items

appeared a firm, but it shows the most usual ones. Please note the difference between IFRS and US

GAAP when interpreting the following sample income statements.


Income statement - Bottom line

1 “Bottom line” is the net income that is calculated after subtracting the expenses from revenue. Since this forms the last line of the income statement, it is informally called “bottom line.” It is important to

investors as it represents the profit for the year attributable to the

shareholders.


Income statement - Bottom line

1 After revision to IAS 1 in 2003, the Standard is now using 'profit or loss for the year' rather than net profit or loss or net income as the descriptive

term for the bottom line of the income statement.


Income statement - Requirements of IFRS

1 All non-owner changes in equity (i.e. comprehensive income ) shall be

presented in either in the statement of comprehensive income (or in a separate income statement and a

statement of comprehensive income). Components of

comprehensive income may not be presented in the statement of

changes in equity.https://store.theartofservice.com/the-income-statement-toolkit.html

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Income Statement