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    Inc Stat

    Uploaded by

    Aleem Jaffery
    The document discusses income statements and their purpose. It defines an income statement as showing a company's financial performance over an accounting period by reporting revenues and expenses. It notes the difference between income statements for profitable versus non-profitable organizations. The document also outlines the broad structure of an income statement and provides an example income statement for ABC Company Inc. It concludes by discussing the various users of income statements such as business owners, executives, investors, banks, government, and suppliers.

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    Inc Stat

    Uploaded by

    Aleem Jaffery
    44 views9 pages
    The document discusses income statements and their purpose. It defines an income statement as showing a company's financial performance over an accounting period by reporting revenues and expenses. It notes the difference between income statements for profitable versus non-profitable organizations. The document also outlines the broad structure of an income statement and provides an example income statement for ABC Company Inc. It concludes by discussing the various users of income statements such as business owners, executives, investors, banks, government, and suppliers.

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    income statement

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    The document discusses income statements and their purpose. It defines an income statement as showing a company's financial performance over an accounting period by reporting revenues and expenses. It notes the difference between income statements for profitable versus non-profitable organizations. The document also outlines the broad structure of an income statement and provides an example income statement for ABC Company Inc. It concludes by discussing the various users of income statements such as business owners, executives, investors, banks, government, and suppliers.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    44 views9 pages

    Inc Stat

    Uploaded by

    Aleem Jaffery
    The document discusses income statements and their purpose. It defines an income statement as showing a company's financial performance over an accounting period by reporting revenues and expenses. It notes the difference between income statements for profitable versus non-profitable organizations. The document also outlines the broad structure of an income statement and provides an example income statement for ABC Company Inc. It concludes by discussing the various users of income statements such as business owners, executives, investors, banks, government, and suppliers.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 9

    Income

    Statement

    What is Income
    Statement ?

    The financial performance of the


    company over a period of time (the
    accounting period)

    Changes in Revenue accounts and


    Expense accounts (profit or loss over
    the period)

    The format is:


    Profit / (Loss) = Revenues - Expenses

    Difference between
    Income statement of
    profitable and non
    profitable organization

    Profitable organization: The


    statement comprises of sales and
    revenue and the net impact is called
    profit or Loss.
    Non Profitable organization: The
    statement comprises of receipts and
    payments and difference of these is
    called surplus or deficit.

    Broad structure of income


    statement
    1. operating activities:
    Income.
    Expenses (cost of sale, admin exp., selling and
    distribution exp.)

    2. Other activities:

    (within the same

    business)

    Other income

    (scrap sale, bi product


    sale other then main business activity)

    Other expense (other than normal


    course of business activities like interest
    expense)

    3. Tax, financial cost, dividends

    ABC Company Inc.


    Income Statement
    Jan 1, 2010 to Dec 31, 2010
    Sales, gross
    less: Sales Return

    $291,025
    $7,688

    Net Sales

    $283,337

    Cost of Goods Sold

    $196,708

    Gross Profit

    $86,629

    Operating expenses:
    Selling & Promotion

    $45,013

    General & Administration

    $22,275

    Total Operating expense

    $67,288

    Operating Profit

    $19,341

    Other Income & Expense:


    Interest & Dividend Income
    less: Interest Expense

    $908
    $2,293

    Users of Income
    statement
    Business Owners & Executives
    Business owners - They have the most direct
    interest in how well the business is doing. The
    better the business performs, the more
    money they make.
    Business executives - Managers (people
    employed by the owners to run the business)
    will get fired if the business performs poorly,
    or get bonuses if it performs well!

    Investors
    Investors - Investors are only going to invest in
    businesses with good business scorecards (financial
    statements).

    The Bank & Govt. Institutions


    The bank - They are interested in the business
    scorecards of businesses they have a relationship
    with. For example, they may want to look at the
    financial statements to see how risky it would be to
    loan money to the business.
    The government and tax authorities - They want to
    know that the business is fulfilling their legal duties,
    and in particular, that they are paying enough tax!
    The financial statements give a good idea of how
    much tax the business should be paying over.

    Suppliers
    Suppliers - Suppliers want to get paid by
    the business they are supplying goods
    to! So they may want to check the
    financial statements of the business
    before they even begin to make any
    agreements to trade with them.

    Conclusion
    Income statement helps investors and creditors.
    Determine the past financial performance of the
    enterprise.
    Predict future performance, and assess the
    capability of generating future revenue streams
    through the reporting of income and expenses.
    In addition to tracking revenue, the income
    statement can compare expenses from year to
    year, indicating a firm's success in controlling
    costs.

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