Income statement

Income statement reports revenue and expenses during the fiscal period
 
Formats of income statement
1. Single-step income statement
2. Multiple-step income statement
    

Single-step income statement

Single-step income statement reports
(1) all revenue items in one group and
(2) all expense items in another group
(3) net income = total revenue - total expenses
  

Structure of 
multiple-step income statement

Structure of multiple-step income statement
  
   1. Sales
   2. Cost of sales
   3. Gross profit
  
   4. Selling, general and administrative expenses
   5. Operating income
  
   6. Nonoperating revenue
   7. Nonoperating expenses
   8. Income from continuing operations
  
   9. Discontinued operations
   10. Income before extraordinary items
  
   11. Extraordinary items
   12. Income before income taxes
  
   13. Income taxes
   14. Net income

Multiple-step income statement

Multiple-step income statement reports various levels of income separately on the income statement

  
   1. gross profit = sales - cost of  sales
 
   2. operating income
     = gross profit - selling, general and administrative expenses
 
   3. income from continuing operations
     = operating income + nonoperating revenue - nonoperating expenses
 
   4. income before extraordinary items
     = income from continuing operations + discontinued operations
 
   5. income before income taxes
     = income before extraordinary items + extraordinary items
 
   6. Net income
     = income before income taxes - income taxes
        

Practice questions

Information
   Sales = $2,000,000
   Cost of sales = $1,200,000  
   Selling, general and administrative expenses = $300,000  
   Nonoperating revenue = $50,000
   Nonoperating expenses = $30,000
   Loss from discontinued operations = $40,000
   Extraordinary gain = $30,000
   Income taxes = $170,000
 
What are the amounts for the following?
   Gross profit
   Operating income
   Income from continuing operations
   Income before extraordinary items
   Income before income taxes
   Income taxes
   Net income
 
Answers
   1. Sales = $2,000,000
   2. Cost of sales = $1,200,000
   3. Gross profit = $2,000,000 - $1,200,000 = $800,000
   
   4. Selling, general and administrative expenses = $300,000
   5. Operating income = $800,000 - $300,000 = $500,000
  
   6. Nonoperating revenue = $50,000
   7. Nonoperating expenses = $30,000
   8. Income from continuing operations
        = $500,000 + $50,000 - $30,000 = $520,000
  
   9. Loss from discontinued operations = $40,000
   10. Income before extraordinary items = $520,000 - $40,000 = $480,000
  
   11. Extraordinary gain = $30,000
   12. Income before income taxes = $480,000 + $30,000 = $510,000
  
   13. Income taxes = $170,000
   14. Net income = $510,000 - $170,000 = $340,000  
 

Examples of income statement

Examples of Income Statement
  
Amazon.com, Inc. 
Amazon.com, Inc.  Income Statement
 
Chevron Corporation
Chevron Corporation  Income Statement

Cisco Systems, Inc.
Cisco Systems, Inc.  Income Statement

Google, Inc.
Google, Inc.  Income Statement

Intel Corporation
Intel Corporation  Income Statement
 
Hewlett-Packard Company
Hewlett-Packard Company  Income Statement

PepsiCo, Inc.
PepsiCo, Inc.  Income Statement
 
Macy's, Inc.
Macy's, Inc.  Income Statement
 
Microsoft Corporation
Microsoft Corporation  Income Statement

Procter & Gamble Company
Procter & Gamble Company  Income Statement