The Income Statement BBI1O1

What is an Income Statement Remember, a Balance Sheet is a snapshot of a business on one day in time Remember, a Balance Sheet is a snapshot of a business on one day in time An Income Statement shows what happens over a period of time in a business, it could be one month, six months, or a year An Income Statement shows what happens over a period of time in a business, it could be one month, six months, or a year An Income Statement shows how much money a business made or lost over a period of time An Income Statement shows how much money a business made or lost over a period of time

The Income Statement As a business operates it makes money from daily activities As a business operates it makes money from daily activities Through these daily activities the business also accumulates costs Through these daily activities the business also accumulates costs What are some of the costs of day to day operations for a business? What are some of the costs of day to day operations for a business?

The Income Statement REVENUE - The money, or the promise of money, received from the sale of goods or services REVENUE - The money, or the promise of money, received from the sale of goods or services EXPENSES – Costs incurred to help generate the revenue of a business (eg. Salaries, Utilities, Fuel, Maintenance) EXPENSES – Costs incurred to help generate the revenue of a business (eg. Salaries, Utilities, Fuel, Maintenance)

The Income Statement Just like the Balance Sheet, the Income Statement has a three line heading: Just like the Balance Sheet, the Income Statement has a three line heading: Who? Who? What? What? When? When? The sources of Revenue are listed next The sources of Revenue are listed next These are listed in alphabetical order These are listed in alphabetical order

The Income Statement EXPENSES are listed after the REVENUE, this is done in alphabetical order EXPENSES are listed after the REVENUE, this is done in alphabetical order Lastly, a net income, or net loss is calculated Lastly, a net income, or net loss is calculated This is completed by subtracting the expenses from the revenue This is completed by subtracting the expenses from the revenue A net income occurs when the revenue is larger than the expenses, and a net loss occurs when expenses are greater than revenue A net income occurs when the revenue is larger than the expenses, and a net loss occurs when expenses are greater than revenue

Revenue: An increase in equity resulting from the sale of goods or services Expenses: A decrease in equity resulting from the cost of the goods or services used to produce the revenue Expenses are shown in detail and in alphabetical order Three line heading: Who? What? When? Net Income The difference between total revenues and total expenses Net Loss: Occurs if expenses are greater than revenues