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The Main Ideas :
- Introduction
- Definition of Income statement ?.
- The Purpose &Importance of Income Reporting.
- Types of income statement.
- Limitations of the Income Statement
- Conclusion?
- Substitute title?
- Introduction
The FASB (and IASB) are working on a joint project on financial statement presentation to address users’ concerns about these practices.
Users believe too many alternatives exist for classifying and reporting income statement information
They note that information is often highly aggregated and inconsistently presented.
As a result, it is difficult to assess the financial performance of the company and compare its results with other companies
“Income Statement”
A financial statement that measures a company's financial performance over a specific accounting period.
Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities.
It shows the net profit or loss incurred over a specific accounting period.
Also known as :
"profit and loss statement"
"statement of revenue and expense".
The Purpose of Income Reporting
- Income is used as the basis of one of the principal forms of taxation.
- Income is used in public reports as a measure of the success of a corporation’s operations.
- Income is used as a criterion for the determination of the availability of dividends.
- Income is used by rate-regulating authorities for investigating whether those rates are fair and reasonable.
- Income is used as a guide to trustees charged with distributing income to a life tenant while preserving the principal for a remainderman.
- Income is used as a guide to management of an enterprise in the conduct of its affairs.
Types of income statement :
- Net income.
- Earnings before interest, taxes, depreciation,
- and amortization (EBITDA).
- Comprehensive income.
- Operating income.
- Earnings before interest and taxes (EBIT).
- Pretax income.
- Other..
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