Income Statement

Definition:

• Reports the accountant’s primary measure of performance of a business, revenues less expenses during the accounting period
  • Net income, net earning
• Heading:
  1. Name of the entity
  2. Title of the statement, Income Statement.
  3. Accounting Period
  4. Unit of measure
• 

Revenues = Expenses + Net Income

• Income statement equation

Revenue:

• Amounts expected to be received for goods or services that have been delivered to a customer, whether or not the customer has paid for the goods or services
• Various terms can be used in income statements to describe different sources of revenue

Expenses:

• Expenses reported in one accounting period actually may be paid for in another accounting period.

Classified Income Statement

Accounts:

	Type	Account	Dr/cr
	Revenues
	Expenses
	Net income