Income Statement Overview

Income Statement

F/S that discloses a company’s performance over a period of time, showing how profitable a company is.

Single Step Income Statement

An income statement format that lumps all revenue and expenses together without separating operating income.

Multi-Step Income Statement

An income statement format that separates operating revenues and expenses from non-operating items.

Revenue

The Company’s gross amount of money earned or the amount of money that the company is entitled to.

Expenses

The Company’s expenses reported if there is a decrease to net assets or an incurrence of liabilities.

Gain

Increase in net assets other than from revenue.

Loss

Decrease in net assets other than from expenses.

Total Comprehensive Income

All changes in Owner’s equity with the exception of investments & distributions by owners.

Foreign Currency Transactions

Changes in the Spot Rate result in reported Gains or Losses on the Income Statement.

Discontinued Operations

A component that is held-for-sale or has been sold in the period.

Freight-in

Cost of receiving goods, capitalized to inventory and included in Cost of Goods Sold (COGS).

Freight-out

Cost of shipping goods to customers, expensed as a selling expense.

Interest Expense

Always included in the Non-Operating section of the Income Statement.

Adjusting Entries

Entries made to recognize revenues when they are earned and expenses when incurred.