The income statement presents information on the financial results of a company's activities over a period of time. The format of the income statement is not specified by U.S. GAAP and the actual format varies across companies.
Here are common components:
Management is interested in both:
Both are useful in planning business operations.
They are also called non-operating revenues and expenses.
This is used to compare the profitability of two or more companies or divisions within a company. Comparisons are made before income taxes are deducted because companies may be subject to different income tax rates.
The income taxes account is shown as a separate item on the income statement. Tax rates are substantial (usually 15-38%) and have a significant effect on business decisions. Most other types of taxes are shown among operating expenses.
Net income is an important performance measure.
The following is a sample income statement for company XYZ for fiscal years ending 2006 and 2007 (expenses are in parentheses).
|Income Statement For Company XYZ FY 2006 and 2007|
|Cost of Sales||(350,000)||(375,000)|
|Operating Expenses (SG&A)||(235,000)||(260,000)|
|Other Income (Expense)||40,000||60,000|
|Extraordinary Gain (Loss)||-||(15,000)|
|Net Profit Before Taxes (Pretax Income)||905,000||1,360,000|
| totsaso: good|
|olagbami: i say good too.|
|wundac: I like it.|
|demonita: It is easy to understand|
|ndachie: simple, concise and easy to comprehend. thanks|
|SpyAli: not bad|
|tamanma: it is simple and concise|
|gill15: not knowing accounting at all that cleared up a lot...|
|oneashok: clear, but whether this is comprehensive?|
|Yfj211: Isn't extraordinary items after income from ops, net of tax|
|fgt124: very good to understand|
|gill15: I hate accounting. That was a great simple first lesson.|
| nab3a123: Yeah isn't extraordinary items after income from operations???|
Net of taxes !!
|emmaejehu: what is the meaning of exraordinary items|
|cy166099: So Net sales could also = allowances - discounts? and where do you find allowances and discounts?|
|cy166099: emmaejhu, extraordinary items are rare and infrequent gains and losses|
|mycfa2016: well explained and made simple to understand|
|792721018: Easy to understand|