Income Statement

Income Statement

An income statement is a financial statement that summarizes the revenue and expenses for a company and also illustrates their net income or net loss.

Features of an Income Statement

Headings

• Who  (name of business)
• What (name of statement)
• When (a period of time:  Ex: Month Ended October 31)

Revenue Section

• Begins with the title Revenue
• Lists all the types of revenue in the 1st column (indented)
• If only 1 revenue, it may go directly into the second column
• Single underline under the last revenue (if more than one)
• Title Total Revenue goes underneath last revenue and amount goes in 2nd column

Expenses Section

• Title Operating Expenses goes at top of expenses section
• Each expenses is indented and listed with their dollar value in 1st column
• Single underline under last expense
• Total Expenses title goes under last expense with the total going in 2nd column

Net Income or Net Loss

• Title is based on whether it is an income or loss
• Title goes under total expenses title
• Figure is double underlined
• If there is a net loss, the amount must go in brackets

Other Information

• A fiscal period is simply a period of time over which earnings are measured
• All revenue and expense accounts also appear on the trial balance with assets, liabilities, and equity accounts

Chart of Accounts

• A chart of accounts is a list of the ledger accounts and their numbers arranged in ledger order
• The accounts are numbered in order
• Most Systems:     Assets are 100’s

                                      Liabilities are 200’s
                                      Equity Accounts are 300’s
                                      Revenue are 400’s
                                      Expenses are 500’s

• These numbers are used to identify accounts when transactions occur

E. Boa
Chart of Accounts
Assets	No	Equity	No
Bank	105	E. Boa, Capital	305
AR - H. Geroux	110	E. Boa, Drawings	310
AR - J. Magill	115
AR - E. Parsons	120	Fees Earned	405
Supplies	125	Advertising Expense	505
Office Equipment	130	Car Expense	510
Automobile	135	Rent Expense	515
		Sundry Expense	520
Liabilities		Wages Expense	530
AP - OK Supply	205
AP - Computer Outlet	210
Bank Loan	215

Proper Formatting of Income Statement

• Titles:
  • Who (name of company)
  • What (income statement)
  • When (length of fiscal period)
• Dollar signs at top of every column and every double underlined total
• Titles for Revenue and Expenses are left aligned
• All revenue and expense accounts are indented
• Total Revenue, Total Expenses and Net Income are bolded
• All totals appear in second column
• Single underline appears under last revenue and expense
• Single underline appears under total expenses
• Double underline appears under net income/loss