Income Statement Example With Explanation

Income statement is the other very important term in accounting for more information about the first important term the balance sheet you can refer to this article.

Income statement example with explanation. For the year ended december 31 2015. Suppose pqr is a uk based company that follows ifrs for reporting. Below is an example of amazon s consolidated statement of operations or income statement for the years ended december 31 2015 2017. The income statement also called a profit and loss statement is a report made by company management that shows the revenue expenses and net income or loss for a period.

In the above example we can see that apart from normal entities all the activities that are unusual and continuous are also taken into count. Income statements are 2 types single step income statement and multiple step income statement for finding net profit or loss an accounting period. This is also known as the statement of financial performance because it tells whether the entity making losses or profits for the period. Paul s guitar shop inc.

Examples of service businesses are medical accounting or legal practices or a business that provides services such as plumbing cleaning consulting design etc. This is achieved by deducting all expenses from all income. Take a look at the p l and then read a break down of it below. For example an annual income statement issued by paul s guitar shop inc.

Income statement shows net profit or net loss arising out of activities of a particular accounting period of any business organization. Here is a sample income statement of a service type sole proprietorship business. Would have the following heading. The income statement format above is a basic one what is known as a single step income statement meaning just one category of income and one category of expenses and prepared specifically for a service business.

Example 3 ifrs based income statement. Balance sheet income statement statement of owner s equity and statement. An income statement shows the net income or net loss of a business. The income statement is one of the five types of financial statements that report and present an entity s financial transactions including revenues expenses net profit or loss for a specific period of time.

A real example of an income statement. Income statement video explanation.