What is an income statement
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.
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
Here is a statement of income of a business with focus on revenue of sales
Types of Income Reports