Income Statement Examples

Income Statement Examples

Income statement provides a summary of all the revenues and the expenses over the time period in order to ascertain the profit or loss of the company and the example of which includes income statement prepared by a company XYZ Ltd. Every half-yearly in order to present the different revenues and the expenses of the company during the period of half-year to present financial picture of the company.

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 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 financial health of the company.

Major parameters included in Income Statement –

Income Statement Examples

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Income Statement Example (GAAP)

Generally Accepted Accounting PrincipleGenerally Accepted Accounting PrincipleGenerally accepted accounting principles (GAAP) are the minimum standards and uniform guidelines for the accounting and reporting. These standards prohibit firms from engaging in unethical business activities and enable for a more accurate comparison of financial reports to investors.read more has two classifications.

Example #1 – Single-Step Income Statement

In this, the classification of all expenses are 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 #1

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.
As compared to a single-step income statement, a 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 6 lakhs;

Explanation #2

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

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

The difference between gross profit and operating expenses gives operating income.

The same follows for non-operating expenses and income.

Income Statement Examples (IFRS)

Most companies follow IFRS in the world for financial reportingFinancial ReportingFinancial Reporting is the process of disclosing all the relevant financial information of a business for a particular accounting period. These reports are used by the stakeholders (investors, creditors/ bankers, public, regulatory agencies, and government) to make investing and other relevant decisions. 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 #3 – IFRS based Income Statement

Examples 3

Explanation #3

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

Also, 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 are also considered.

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

Example #3 – IFRS based Income Statement

Examples 4

Conclusion

The income statement is one of the three fundamental financial statements that aims at the calculation of net income from the operations of the organization. GAAP and IFRS are the two major financial reporting methods. Income statement states the financial health of the organization.

This article has been a guide to Income Statement Examples. Here we discuss Income Statement examples using IFRS & GAAP accounting and also the Single Step and Multi-Step Income Statement. You may learn more about accounting from the following articles –

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