Basics Of Income Statement

The net income or net earnings is the amount of money the company has left after paying its expenses and its taxes.

Basics of income statement. The income statement is a report showing the profit or loss for a business during a period as well as the incomes and expenses that resulted in this overall profit or loss. The income statement totals the debits and credits to determine net income before taxes. It lists only the income and expense accounts and their balances. The income statement shows an entity s sources of revenue expenses incurred and the resulting profit or loss for the period usually one year.

Explanation of the income statement its components what they represent and basic ways to analyze the information. Basics of income statement income statement provides a basic summary of the company s revenues and expenses within a specified period. The income statement summarizes a company s revenues and expenses over a period either quarterly or annually. The difference or net between the revenues and expenses for direct delivery is often referred to as the bottom line and it is labeled as either net income or net loss.

The income statement comes in two forms multi step and single step. Income statement starts with the revenue which a company makes by selling products to its customers. There are different formats for presentation of revenue and expenses. An income statement shows the amount of money a company takes in the expenses of the company and the net earnings also know as net profit net income or just plain earnings of the company over a specific period of time.

The income statement is of interest to analysts investors and potential investors as it tells them how profitable a company is. The purpose of the income statement is to show a company s profitability during a specific period of time. Not surprisingly the income statement is also known as the profit and loss statement. The income statement can be run at any time during the fiscal year to show a company s profitability.

In a nutshell a company s net income which is also called profit or loss is its revenues minus all. This 5 part series was initially develo. The income statement or profit and loss report is the easiest to understand.