Income statement: Definition, preparation, and examples | QuickBooks (2024)

FAQs

What is the definition of income statement and examples? ›

An income statement shows a company's revenues, expenses and profitability over a period of time. It is also sometimes called a profit-and-loss (P&L) statement or an earnings statement. It shows your: revenue from selling products or services. expenses to generate the revenue and manage your business.

Income Statement. An income statement reports the revenues earned less the expenses incurred by a business over a period of time.

The single-step process follows this equation: Net income = (revenues + gains) – (expenses + losses). Multistep income statement: This type of statement is common for companies with multiple lines of business or those that sell tangible goods.

Your income statement follows a linear path, from top line to bottom line. Think of the top line as a “rough draft” of the money you've made—your total revenue, before taking into account any expenses—and your bottom line as a “final draft”—the profit you earned after taking account of all expenses.

An income statement is a financial statement that shows you the company's income and expenditures. It also shows whether a company is making profit or loss for a given period. The income statement, along with balance sheet and cash flow statement, helps you understand the financial health of your business.

The basic income statement shows how much revenue a company earned (or lost) over a specific period (usually for a year or some portion of a year). An income statement also shows the costs and expenses associated with earning that revenue. Another term for an income statement is a profit and loss statement.

The income statement can be presented in a “one-step” or “two-step” format. In a “one-step” format, revenues and gains are grouped together, and expenses and losses are grouped together. These amounts are then totaled to show net income or loss.

How to calculate the revenue? ›

Total Revenue = Number of Units Sold X Cost Per Unit

You can use the total revenue equation to calculate revenue for both products and services. To make it easy to remember, think “quantity times the price.”

Your income statement is available to access in ATO online services through myGov or the ATO app. If you don't have a myGov account, you will need to create a myGov account and link it to the ATO. Most employers have until 14 July to finalise their data.

It's a snapshot of your whole business as it stands at a specific point in time. An income statement describes how profitable your business is. It shows you how much money flowed into and out of your business over a certain period of time.

The income statement presents revenue, expenses, and net income. The components of the income statement include: revenue; cost of sales; sales, general, and administrative expenses; other operating expenses; non-operating income and expenses; gains and losses; non-recurring items; net income; and EPS.

Accounts on the income statement are either revenue or expense accounts. A traditional income statement outlines revenue, expenses, and net income in either a simple or multi-step format. The multi-step income statement separates business operations from other activities, such as investing.

The income statement presents revenue, expenses, and net income. The components of the income statement include: revenue; cost of sales; sales, general, and administrative expenses; other operating expenses; non-operating income and expenses; gains and losses; non-recurring items; net income; and EPS.

Owning vs Performing: A balance sheet reports what a company owns at a specific date. An income statement reports how a company performed during a specific period. What's Reported: A balance sheet reports assets, liabilities and equity. An income statement reports revenue and expenses.