Income Statement | Format | Types | Example
1 of 3
AccountingExplained
http://accountingexplained.com/financial/statements/income-statement
Financial Accounting
Managerial Accounting
Miscellaneous
Home > Financial Accounting > Financial Statements > Income Statement
Income Statement
Tweet
Like
87
Financial Accounting
Income statement (also referred to as (a) statement
Financial Accounting Intro
of income and expense or (b) statement of profit or
Accounting Principles
loss or (c) profit and loss account) is a financial
Accounting Cycle
statement that summaries the results of a companys
Financial Statements
operations for a period. It presents a picture of a
Income Statement
companys revenues, expenses, gains, losses, net
Single-Step Income Statement
income and earnings per share (EPS).
Multi-Step Income Statement
Together with balance sheet, statement of cash flows
Income Statement by Nature
and statement of changes in shareholders equity,
Income Statement by Function
income statement forms a complete set of financial
Discontinued Operations Income
statements.
Comprehensive Income
Earnings per Share (EPS)
Format
Operating Segments
Statement of Retained Earnings
A typical income statement is in report form. The
Balance Sheet
header identifies the company, the statement and
the period to which the statement relates, the reporting currency and the level of rounding-off. The header is
Extraordinary Items
followed by revenue and cost of goods sold and calculation of gross profit. Further down the statement there is
Statement of Cash Flows
detail of operating expenses, non-operating expenses, and taxes and eventually the statement presents net
Operating CF: Direct Method
income differentiating between income earned from continuing operations and total net income. In case of a
Operating CF: Indirect Method
consolidated income statement, a distribution of net income between the equity-holders of the parent and
Investing Activities Cash Flow
non-controlling interest holders is also presented. The statement normally ends with a presentation of earnings
Financing Activities Cash Flow
per share, both basic and diluted. Important line items such as revenue, cost of sales, etc. are cross-referred to
Statement of Changes in Equity
the relevant detailed schedules and notes.
Notes and Other Disclosures
Manage. Discussion & Analysis
Types
Changes in Accounting Principles
There are two types of income statements: single-step income statement, in which there are no sub-totals such
as gross profit, operating income, earnings before taxes, etc.; and multi-step income statement, in which similar
Changes in Accounting Estimates
Correction of Accounting Errors
expenses are grouped together and intermediate figures such as gross profit, operating income, EBIT, etc. are
Subsequent Events
calculated.
Cash and Cash Equivalents
Another classification of income statement depends on whether the expenses are grouped by their nature or
function. Income statement by nature classifies expenses according to their nature i.e. without allocating them to
different business activities, while income statement by function classifies expenses according to the business
operations that they support. For example, income statement by nature shows line items such as salaries,
depreciation, rent, etc., while income statement by function allocate salaries, depreciation, rent, etc. between
cost of good sold, selling expense, general and admin expenses, etc.
Receivables
Inventories
Non-Current Assets
Investments
Revenue Recognition
Employee Benefits
Lease Accounting
Example: Template
Shareholders' Equity
Below is a sample income statement. The first five lines make the header followed by a multi-step overview of
expenses. All amounts other than EPS are in million USD.
Long-term Liabilities
Partnership Accounting
Business Combinations
Financial Ratio Analysis
IS Global, Inc.
Specialized Ratios
(Consolidated) Statement of Income and Expense
for the year ended 31 December
Notes
2013
2012
Revenue
14
201.9
182.1
Cost of sales
15
(158.4)
(151.6)
43.5
30.5
Gross profit
Selling and distribution expenses
16
(9.8)
(8.9)
General and administrative expenses
17
(14.0)
(11.0)
07.02.2015 21:20
Income Statement | Format | Types | Example
2 of 3
http://accountingexplained.com/financial/statements/income-statement
IS Global, Inc.
Find us on Facebook
Copyright 2011 - 2013 AccountingExplained.com
| All Rights
Reserved
(Consolidated) Statement
of Income
and Expense
Accounting Explained
No part of this website may be reproduced
without
prior written
permission.
for the
year a
ended
31 December
Like
Contact Us | Privacy Policy | Disclaimer
Notes
2013
2012
Other operating income and gains
18
1.8
2.6
Other operating expenses and losses
19
(3.4)
(1.3)
18.1
11.9
Operating profit/earnings before interest and taxes (EBIT)
Interest income
20
1.3
0.6
Interest expense
20
(3.6)
(2.8)
Net interest expense
20
(4.9)
(3.4)
Profit from investments under equity method
22
6.9
5.5
20.1
14.0
(6.0)
(4.2)
14.1
9.8
Earnings before taxes
Income taxes
23
Income from continuing operations
Income from discontinued operations
24
2.1
3.1
Net income
17
16.2
12.9
14.6
11.6
1.6
1.3
17,890 people like Accounting Explained.
Facebook social plugin
Distribution of net income:
Equity-holders of parents
Non-controlling interest-holders
Earnings per share:
19
Basic, attributable parent
0.15
0.12
Diluted, attributable to parent
0.15
0.11
Basic, from continued operations, attributable to parent
0.14
0.10
Diluted, from continued operations, attributable to parent
0.14
0.09
Components
Following are key line items that appear on a typical income statement:
Revenue: represents the amount earned by the company in exchange of goods it supplied and services
it provided. When there are few sources of revenue, a breakup may appear on the face of the income
statement; otherwise, a separate note provides a complete picture.
Cost of sales: represents the cost of goods sold and services provided. It includes all such costs that
can be traced or assigned to goods sold or services provided. Examples include raw materials, salaries of
factory or service shop employees, manufacturing facility rent, depreciation of manufacturing equipment,
lease rentals on equipment used in manufacturing or service delivery, indirect materials needed for
production, etc. Typically, a separate note provides a complete break-up of cost of sales.
Gross profit = revenue cost of sales; it represents the profit earned on the goods and services of the
company before any selling, general and administrative expenses and finance costs are accounted for.
Operating expenses: mainly include selling and distribution expenses and general and administrative
expenses. Examples include salary of the CEO, marketing expenses, office rent, salaries of administrative
staff, fuel for delivery vehicles, etc.
Operating profit: (equivalent to earnings before interest and taxes (EBIT)) = gross profit operating
expenses; as the name suggests, it is the profit after cost of sales and all operating expenses have been
charged to revenue. It is before any adjustment for interest or investment income and interest expense
and taxes.
Income from continuing operations = EBIT taxes; it represents the net income (i.e. after-tax
income) earned from business components that the company intends to own in the future. It excludes
any income earned during the year from business components that are treated as discontinued
operations. Income from continuing operations provides a picture of the companys continuing earning
capacity.
Income from discontinued operations: is the after-tax income of business components which the
company has disposed-off during the year or has classified as held-for-sale at the year-end.
Net income = income from continued operations + after-tax income from discontinued operations; a
companys total net income includes income from both continued operations and discontinued
operations. It represents the income earned during the year after accounting for all expenses. It is
carried to statement of changes in shareholders equity where it is added to opening balance of the
07.02.2015 21:20
Income Statement | Format | Types | Example
3 of 3
http://accountingexplained.com/financial/statements/income-statement
07.02.2015 21:20
