What is income
Revenue of products sales and services sales will be deducted by amounts of charges to show income amounts of a business. A standard format of income statement will be readable by any accountant and external users but it is one of the most important documents for banks to approve your loan requests. so that it is a top priority of tasks to prepare a true report of income to get a loan on-time. also tax department will ask a clear reports of gross income and net income.
At a glance income statement will be useful for:
- Share holders
- Tax department
- New Investors
The business entity’s Income Statement, like the Balance Sheet and Statement of Changes in Financial Position, is an end result of the accounting procedures. It may be defined as a summary of the revenues, expenses and net income of a business entity for a specific period of time, and is sometimes called the Earnings Statement, Operating Statement or Statement of Profit and Loss.
In preparing financial statements of a firm, the accountant must consider the accounting policies established by its management. Such policies can significantly affect the amount of net income, and must be disclosed, according to APB Opinion No. 22, as an integral part of all audited financial reports.
Policies of special interest to the analyst, such as inventory, depreciation, pensions and other specified matters fall into this category, as do unusual applications of GAAP, industry peculiarities which conflict with GAAP and those which differ from existing acceptable alternatives. Another requirement, established by APB Opinion No. 15, is that the published income statement must disclose net earnings or loss per share.
Income Statement Format
The income statement may be presented in a multiple-step format or single-step format. Unlike the balance sheet, Which is a position statement at a fixed point in time, the income statement reports activities over a period of time. That is, it is summarized net income for the current fiscal period. A mistake of income statement maybe has tax charges for your business so, always and frequently a meeting with your accountant and tax consultant is the best idea to protect your business from money loss.
Important Note: All income reports are sorted in date of transactions