What Is Income Statement Equation

The basic equation for the income statement can be written that total revenues minus total expenses equal net income.

What is income statement equation. An income statement is a financial statement detailing a company s revenue expenses gains and losses for a specific period of time that is submitted to the securities and exchange commission sec. The income statement shows the business s income expenses gains and losses. The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non operating activities. The income statement is one of a company s core financial statements that shows their profit and loss over a period of time.

Some also call the income statement a statement of profit and loss or p l. The income statement is one of the major financial statement for a business which shows its expenses revenue profit and loss over a period of time. The income statement is one of three statements. Profit or loss is determined once all the expenses of the company are subtracted from revenue or sales for that period.

Net income formula can be calculated by subtracting the total expenses of the business from the total revenue. At the most basic level it shows profit and loss. At a high level the income statement formula can be as simple as. Cost of goods sold net income revenues cost of goods sold net income revenues login.

Cost of goods sold operating expenses net income b. Net income revenue expenses. For many businesses however the income statement formula is slightly more complex. Revenues cost of goods sold operating.

Net income total revenue total expenses from this equation management investors and creditors find the ability of the company to producing the profit. The end product of these transactions is net income or loss.