Income Statement Purpose Example

Below is an example of amazon s consolidated statement of operations or income statement for the years ended december 31 2015 2017.

Income statement purpose example. The purpose of the income statement is to show the reader how much profit or loss an organization generated during a reporting period this information is more valuable when income statements from several consecutive periods are grouped together so that trends in the different revenue and expense line items can be viewed. Income statements are 2 types single step income statement and multiple step income statement for finding net profit or loss an accounting period. Income statement purpose 2. These weekly or monthly income statements help management evaluate the company s performance.

Learn to analyze an income statement in cfi s financial analysis fundamentals. For example if an organization is preparing income statement for the six months ending 31 december 2013 comparative figures of prior period should relate to the six months ending 31 december 2012. It would also show the net income or loss at the end of january. Income statement shows net profit or net loss arising out of activities of a particular accounting period of any business organization.

There could be several reasons for creating a financial statement and it ultimately depends on the end user. Take a look at the p l and then read a break down of it below. This income statement of teddy s toy shop inc. Shows that the company performed well as it made a net profit of 18 650 in the year 2018.

Examples of service businesses are medical accounting or legal practices or a business that provides services such as plumbing cleaning consulting design etc. Through the income statement the reader can comprehend how profitable the business is and what are the various business activities that the company has undertaken. Single step income statement. A january income statement for example would show all the income and expenses for the month.

Income statements created for management are usually shorter in time frame. The income statement contains several subtotals that can assist in. Purpose of the income statement. The income statement format above is a basic one what is known as a single step income statement meaning just one category of income and one category of expenses and prepared specifically for a service business.

Income statement is one of the important financial reports of company which is prepared with the purpose of providing the summary of all the revenues and the expenses over the time period in order to ascertain the profit or loss of the company and measuring its business activity over the time period depending upon various requirements of users. A real example of an income statement.