Chapter 6 Financial Reporting Formulas: The Income Statement

While the balance sheet reports balances of asset, liability and net worth accounts at the end of the period, the income statement summarizes the transaction activities during the period. These include revenue, cost of goods sold, expenses, non-operating transactions, and net profit. The balance sheet and income statement are always released together; and the period covered by the income statement must end on the same date as the reporting date of the balance sheet. This is the end of a fiscal quarter or fiscal year.

The income statement (also called “profit and loss statement”) includes accrued revenue, costs and expenses in most instances. Very few companies report on the cash basis ...

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