How To Read An Income Statement Pdf

Chapter 4 income statement and related information 4 3 illustration illustration 4 2 presents an income statement for boc hong company.

How to read an income statement pdf. The income statement profit and loss records all income and expenses of the business during a specified time period and is the accepted method of determining profits and losses. Trask for the times standard april 11 2010 at least once a year we should take a few minutes from working in our businesses to work on our businesses financially speaking. The next is the income statement shown in figure 3 2 which provides information on the revenues and expenses of the firm and the resulting income made by the firm during a period. The income statement also known as the profit and loss p l statement is the financial statement that depicts the revenues expenses and net income generated by an organization over a specific.

Tax time can be a good time for this because financial statements are or can be put together by our cpa or tax preparer. In arriving at net income the statement presents the following subtotals. The non operating section of the income statement includes any related to the nonoperating. At the top of the income statement the first thing you will notice is that it tells you what period the information is for typically a month a quarter or a year.

How to read your financial statements the income statement colleen m. Identifies the business the financial statement title and the time period summarized by the statement. This example financial report is designed for you to read from the top line sales revenue and proceed down to the bottom line net income. Each step down the ladder in an income statement involves the deduction of an expense.

Income statements used for comparison can use dollar amounts percentages or a combination. Boc hong s in come statement includes all of the major items in the list above except for discontin ued operations. The other key thing at the top of the income statement is to tell you whether the amounts shown are actual dollars down to the penny or whether these are truncated numbers. The operating section of the statement example in pdf income reports the revenues from production minus the operating expenses.

Using income statements to make comparisons is an extremely useful management decision making tool. The period can be a quarter if it is a quarterly income statement or a year if it is an annual report. Chapter 6 income statement ratios the best way to use an income statement is to compare a recent one with earlier ones for a similar period.