Income statement

Income statement

• Primarily focuses on the company’s revenues and expenses during a particular period
• Also known as the profit and loss statement or the statement of revenue and expense
• Structure: Focuses on four key items—revenue, expenses, gains, and losses
• Net Income = (Total Revenue + Gains) – (Total Expenses + Losses)
• Revenues and Gains
• Operating revenues
• i.e., revenue achieved from the sale of the product
• Non-operating revenues
• e.g., revenue from interest, rental income from business property, income from strategic partnerships like royalty payment receipts, etc
• Gains
• e.g., the net income realized from one-time non-business activities, like a company selling its old transportation van, unused land, or a subsidiary company
• Expenses and Losses
• Primary activity expenses
• e.g., the cost of goods sold (COGS), selling, general and administrative expenses (SG&A), depreciation or amortization, and research and development (R&D) expenses
• Secondary activity expenses
• e.g., interest paid on loan money
• Losses as expenses
• e.g., one-time or any other unusual costs, or expenses towards lawsuits