What is the layout of an income statement?


What is the layout of an income statement?

Income Statement:

An income statement is a report found in the financial statements of a business which meant to show the profitability of the same business. Moreover, items found in the income statement include the following: sales revenue, cost of goods sold, operating expenses and, etc.

Answer and Explanation:

Income Statement provides an insight as to how profitable a business is since it is composed of line items indicating its sales performance during the year. Moreover, the income statement is composed of Sales Revenue, Cost of Goods Sold, Expenses, and Net Income.

Sales revenue is a measurement of the amount of goods sold or services performed by a business at its sales price. Cost of Goods Sold (CoGS) refers to the total amount of goods sold or services performed by a business expressed at its purchase cost. CoGS is then deducted from the sales revenue to calculate the Gross Profit. Meanwhile, expenses, which are categorized into two, namely: Operating and Non-Operating Expenses depending on its occurrence in the normal business operations, are also listed in the income statement to show how the management is doing in managing the operation costs. Lastly, Net Income is the amount showing how much income earned remained after deducting every expense incurred during the year.

Learn more about this topic:

What Is an Income Statement? - Purpose, Components & Format

from Accounting 101: Financial Accounting

Chapter 2 / Lesson 2

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