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Income Statement - An Overview


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Income Statement - An Overview
  

  

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
  

        





U.S. GAAP by Codification Topic 
 
 105  GAAP Hierarchy 
 105  GAAP History 

 205  Presentation of Financial Statements 
 205-20 Discontinued Operations 
 210  Balance Sheet 
 210-20 Offsetting 
 220  Comprehensive Income 
 225  Income Statement 
 225-20 Extraordinary and Unusual Items 
 230  Statement of Cash Flows 
 250  Accounting Changes and Error Corrections 
 260  Earnings per Share 
 270  Interim Reporting
 
 310  Impairment of a Loan
 320  Investment Securities 
 320  Other-Than-Temporary Impairments, FSP FAS 115-2 
 320-10-05 Overview of Investments in Other Entities 
 320-10-35 Reclassification of Investments in Securities
 323-10 Equity Method Investments
 323-30 Investments in Partnerships and Joint Ventures 
 325-20 Cost Method Investments 
 330  Inventory

 340-20 Capitalized Advertising Costs 
 350-20 Goodwill 
 350-30 Intangibles Other than Goodwill 
 350-40 Internal-Use Software 
 350-50 Website Development Costs 
 360  Property, Plant and Equipment
 360-20 Real Estate Sales 
 
 410  Asset Retirement and Environmental Obligations 
 420  Exit or Disposal Cost Obligations 
 450  Contingencies 
 450-20 Loss Contingencies 
 450-30 Gain Contingencies
 480  Redeemable Financial Instruments 

 505-20 Stock Dividends, Stock Splits 
 505-30 Treasury Stock 

 605  SEC Staff Accounting Bulletin, Topic 13 
 605-25 Revenue Recognition - Multiple Element Arrangements 
 
 715-30 Defined Benefit Plans - Pension
 718  Share-Based Payment 
 730  Research and Development 
 730-20 Research and Development Arrangements 

 805  Business Combinations  
 810  Consolidation 
 810  Noncontrolling Interests 
 810  Consolidation of Variable Interest Entities, SFAS 167 
 
 815  Derivatives and Hedging Overview 

 820  Fair Value Measurements  
 820  Fair value when the markets are not active, FSP FAS 157-4
 825  Fair Value Option 

 830  Foreign Currency Matters 
 830-20 Foreign Currency Transactions 
 830-30 Translation of Financial Statements 
 835  Interest 
 835-20 Capitalization of Interest 
 835-30 Imputation of Interest 

 840  Leases 
 840-20 Operating Leases 
 840-30 Capital Leases 
 840-40 Sale-Leaseback Transactions
 845  Nonmonetary Transactions 

 855  Subsequent Events 
 860-20 Sale of Financial Assets, SFAS 166 
 860-50 Servicing Assets and Liabilities, SFAS 156 

 985-20 Costs of software to be sold  

 



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