INCOME

STATEMENT
GROUP 1:
ADA, ELDEN JON W.
CORDANO, HAZEL F.
MANALO, NATHANAEL JOHN L.
REA,DUFF ZACHARY D.
OQUENDO, PAULINE

INCOME STATEMENT
a.k.a Profit and Loss Statement
a financial statement that measures a
company's financial performance over a
specific accounting period
one of the three major in financial
statements
report of income, expenses and the
resulting of profit or loss earned

INCOME STATEMENT
is a key financial document in
business
used to track income and expenses
important because it shows
the profitability of a company during
the time interval specified in its
heading

COMPREHENSIVE INCOME
Net income +The periods change in
accumulated other comprehensive income
=Comprehensive income
Unrealized holding gains and losses on
available-for-sale marketable securities
Changes to stockholders equity resulting from
additional minimum pension liability adjustments
Unrealized gains and losses from derivative
instruments

PARTS OF INCOME STATEMENT

1.Operating Items Section
revenue
expenses

2.Non-Operating Items Section

gains
losses

INCOME MAY PRESENTED INTO:

A. MULTI-STEP FORM
Gross profit
Operating income
Income before taxes
Net income

INCOME MAY PRESENTED INTO:

B. SINGLE-STEP FORM
Total of all revenues and gains
Less the total of all expenses and losses

SIMPLE MULTI-STEP INCOME STATEMENT

(separates operating income and expenses from non-operating items)

PROCESS:
1.List the Sales Figure (gross revenue)
2.Deduct Cost of Goods Sold (all cost to make/buy the goods)
3.Calculate Gross Profit (Sales less Cost of Goods Sold)
4.Deduct Operating Expenses(Sales related/ Administration)
[e.g.,rent,salaries]

SIMPLE MULTI-STEP INCOME STATEMENT

5.Calculate Operating Income (Gross Profit Operating Income)
6.Add other Revenue (interest and gain)
7.Deduct Other Expenses (interest and loss)
8.Calculate Net Income

BASIC COMPONENTS OF
INCOME STATEMENT
Revenue
-includes income earned from the principal activities of an entity
Cost of Sales
-represents the cost of goods sold or services rendered during an
accounting period.
Other Income
-consists of income earned from activities that are not related to
the entity's main business

BASIC COMPONENTS OF
INCOME STATEMENT
Administrative Expenses
-comprise of costs relating to the management and support
functions within an organization that are not directly involved in
the production and supply of goods and services offered by the
entity
Other Expenses
-essentially a residual category in which any expenses that are
not suitably classifiable elsewhere are included
Finance Charges
-usually comprise of interest expense on loans and debentures

BASIC COMPONENTS OF
INCOME STATEMENT

Distribution of Cost

-includes expenses incurred in delivering goods from the

business premises to customers
Income Tax
- is a tax on a person's income, emoluments, profits arising from
property, practice of profession, conduct of trade or business or
on the pertinent items
Prior Period Comparatives
-is presented along side current period's financial results to
facilitate comparison of performance over a period

COST OF GOODS SOLD

were sold to produce revenue (cost of services in a service
company)
Manufacturer
Retailer
Beginning Inventory
+ Purchases
Ending Inventory
= Cost of Goods Sold

Beginning Inventory
+ Cost of Goods
Manufactured
Ending Inventory
= Cost of Goods Sold

NET SALES
Revenue from the sale of principal goods or services sold to
customers
Shown net of:
Discounts
Returns
Allowances

Earnings Per Share (EPS)

EPS calculation
[Net income less preferred dividends]
[weighted average of common shares
outstanding]
Reported on the face of the income statement
Income before discontinued operations and
extraordinary items
Separately reported items
Discontinued operations (net of tax)
Extraordinary items (net of tax)
Net income

PURPOSE AND USE

provides the basis for measuring performance of an entity over the
course of an accounting period
forms the basis of important financial evaluation of an entity when it
is analysed in conjunction with information contained in other
financial statements

MOST COMPANIES WITH COMPLEXITY

WITH THEIR INCOME STATEMENT
A. Revenues and Gains
1. Revenues from primary activities
2. Revenues or income from secondary activities
3. Gains (e.g., gain on the sale of long-term assets, gain on lawsuits)

B. Expenses and Losses

1. Expenses involved in primary activities
2. Expenses from secondary activities
3. Losses (e.g., loss on the sale of long-term assets, loss on lawsuits)

TEMPLATE (SAMPLE)

TEMPLATE (SAMPLE)

SAMPLE PROBLEM
"On December 31, 2015, MEGATRON COMPANY, a Construction
Company, completed its first full year in business. During the year, it
billed its customer DECEPTICON COMPANY P5,000,000. The
company incurred a total of 500 steel and 500 bags of cement.
MEGATRON has 50 construction workers which earns a wage of
P75/hour. The workers are paid based on an eight hour working day. The
company incurred a total of 100 days to finish the project. Depreciation
on equipment totalled P125,000. The company's marketing and selling
expense is P25000.The total general and administrative expenses is
P150,000. The company has incurred 10% interest on a debt of
P50,000. The cost per unit of steel is P150 and the bag of cement is
P250.Assume a tax rate of 30%. Prepare an income statement for
MEGATRON COMPANY."

SAMPLE PROBLEM

REFERENCES:
http://www.investopedia.com/terms/i/incomestatement.a
sp\
http://www.wikihow.com/Write-an-Income-Statement
http://accounting-simplified.com/financial/statements/i
ncome-statement-profit-and-loss.html