Chapter 14

Income Statement

What Is an Income Statement?

The income statement is an integral part of an entity's financial statements, and contains the results of its operations during an accounting period, showing revenues and expenses, and the resulting profit or loss. The income statement is also known as the profit and loss statement (P&L).

There are two ways to present the income statement. One method is to present all items of revenue and expense for the reporting period in a statement of comprehensive income. Alternatively, you can split this information into an income statement and a statement of comprehensive income.

How Many Periods Should I Include in an Income Statement?

There is no specific requirement for the number of periods that your company's income statement should include, unless the company is publicly held (i.e., it sends reports to the Securities and Exchange Commission). A privately held company usually reports the results of its operations for the most recent month in one column, and for the year to date in another column. If your company is publicly held, then you will most likely have to report the results of the most recent quarter and for the year to date, as well as the same periods for the preceding year.

Which Line Items Should I Include in an Income Statement?

There are no specific requirements for the line items to include in the income statement, but the following line items are typically used, based on general practice:

  • Revenue
  • Tax expense ...

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