Income Statement Examples

Updated on January 3, 2024
Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

What Are Income Statement Examples?

The income statement examples summarize all the revenues and expenses over the period to ascertain the company’s profit or loss. The example includes an income statement prepared by a company, XYZ Ltd. Every half-yearly to present the company’s different revenues and expenses during the period of half-year to present a financial picture of the company.

Income Statement Examples

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Source: Income Statement Examples (wallstreetmojo.com)

An income statementAn Income StatementThe income statement is one of the company's financial reports that summarizes all of the company's revenues and expenses over time in order to determine the company's profit or loss and measure its business activity over time based on user requirements.read more (also known as a profit and loss account) is one of the financial statementFinancial StatementFinancial statements are written reports prepared by a company's management to present the company's financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels.read more that shows the income and expenses of a company for a specified time. Investors and business managers use the income statement to determine the company’s financial health.

Income Statement Examples Explained

The income statement examples feature one of the three fundamental financial statements that aim at calculating net income from the organization’s operations. Generally Accepted Accounting PrincipleGenerally Accepted Accounting PrincipleGAAP (Generally Accepted Accounting Principles) are standardized guidelines for accounting and financial reporting.read more (GAAP) and International Financial Reporting Standards (IFRS) are the two major financial reporting methods based on which credentials, like balance sheet and income statement examples, are prepared. In addition, the income statement states the financial health of the organization.

Major parameters included in and showcased in the comprehensive income statement examples are :

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Video Explanation of Income Statement

 

Examples – GAAP

GAAP classifies the statement as single-step and multi-step, and hence both single-step and multi-step income statement examples are listed below:

Example #1 – Single-Step Income Statement

In this, the classification of all expenses is mentioned under this head. Then they are deducted from the total income to get net income before tax. Both small and large companies use such a format.

There is no implication that one type of revenue or expense item has priority over another. All are treated equally.

  • Revenues: All income and revenues are totaled.
  • Expenses: All expenses are totaled.
  • Net Income: Net income is derived from subtracting Expenses from Income. It is also referred to as “the bottom line.”
Income Statement Formula
Income Statement Examples 1

Assuming 200000 outstanding sharesOutstanding SharesOutstanding shares are the stocks available with the company's shareholders at a given point of time after excluding the shares that the entity had repurchased. It is shown as a part of the owner's equity in the liability side of the company's balance sheet.read more;

Explanation

Suppose ABC is a USA-based company. In the above example, the single-step income statement is followed where all the incomes from various sources are totaled, and all the expenses to different requirements are totaled. Net income is derived from the difference between the two. None of the entities is given priority. All are treated equally.

Example #2 – Multi-Step Income Statement

The multi-step income statement formatMulti-step Income Statement FormatMulti-Step Income Statement is the income statement of the company which segregates the total operating revenue of the company from non-operating revenue and total operating expenses of the company from non-operating expenses thereby separating the total revenue and expense of a particular period into two different sub-categories i.e., operating and the non-operating.read more comprises a gross profitGross ProfitGross Profit shows the earnings of the business entity from its core business activity i.e. the profit of the company that is arrived after deducting all the direct expenses like raw material cost, labor cost, etc. from the direct income generated from the sale of its goods and services.read more section where the cost of sales is deducted from sales, followed by income and expenses to reach an income before tax.

Compared to a single-step income statement, multi-step income statement examples are more complex.

It also provides a more detailed overview of the company’s financial position.

The sections of a multi-step income statement include:

Income Statement Examples 2

Assuming the number of outstanding shares to be six lakhs;

Explanation

Suppose XYZ is a US-based company, and a multiple-step income statement is followed here. We can see that all entities are assembled in different categories based on their characteristics.

  • Gross profit is derived by subtracting COGS from Sales.
  • Selling and administration are operating expenses and are shown separately.

The difference between gross profit and operating expenses give operating incomeOperating Expenses Gives Operating IncomeOperating Income, also known as EBIT or Recurring Profit, is an important yardstick of profit measurement and reflects the operating performance of the business. It doesn’t take into consideration non-operating gains or losses suffered by businesses, the impact of financial leverage, and tax factors. It is calculated as the difference between Gross Profit and Operating Expenses of the business.read more.

The same follows for non-operating expenses and income.

Examples – IFRS

Most companies follow IFRS the world for financial reportingFinancial ReportingFinancial reporting is a systematic process of recording and representing a company’s financial data. The reports reflect a firm’s financial health and performance in a given period. Management, investors, shareholders, financiers, government, and regulatory agencies rely on financial reports for decision-making.read more.

The IFRS requires the following items in the income statement :

  • revenue
  • finance cost
  • The share of post-tax results of associates and joint ventures
  • after-tax gain or loss.
  • profit or loss for the period

Under IFRS, a company that shows operating results should include all the items of irregular or unusual nature.

Example #1

Examples 3
Explanation

Suppose PQR is a UK-based company that follows IFRS for reporting. Then, 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.

Profit from joint venturesJoint VenturesA joint venture is a commercial arrangement between two or more parties in which the parties pool their assets with the goal of performing a specific task, and each party has joint ownership of the entity and is accountable for the costs, losses, or profits that arise out of the venture.read more and associates is also considered.

So, IFRS is a more comprehensive and informative type of reporting income statement.

Example #2

Examples 4
Explanation

Suppose STU is a US-based company that follows IFRS for reporting. It is seen that apart from normal entities, other unusual and continuous activities are also taken into account. Expenses and transaction details from joint ventures and associates are also considered. Thus, this type of reporting gives a more comprehensive look at the income generated for a given period.

This article is a guide to what are Income Statement Examples. We explain examples using two methods – GAAP’s Single Step & Multi-Step Income Statement & IFRS. You may learn more about accounting from the following articles –

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