While learning, you can fin
d that income statement is defined as a report that provides accounting information about a government entities, interested parties, stock holders, share holders. The information provided in this statement is a result of operations like for instance (loss or profit) Income statements are produced by a business at various periods. This is produced daily, monthly, yearly depending on a company. This statement allows the users quickly get simplified.
Main parts of the income statement:
Total revenue- this is the gross amount for which goods were sold or services were provided to the consumers or costumers of the business. Revenue reflected in the income statement is not equal to the cash received from consumer for the goods. It is the total money received from the sale. It is calculated by taking the price of the sale times the quantity sold.
Cost of service provided or cost of goods sold- In financial accounting, cost of goods sold (COGS) includes the direct costs attributable to the production of the goods sold by a company. This amount includes the materials cost used in creating the goods along with the direct labor costs used to produce the good. It excludes indirect expenses such as distribution costs and sales force costs. It appears on the income statement and can be deducted from revenue to calculate a company’s gross margin.
Gross profit- In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments. Note that this is different from operating profit (earnings before interest and taxes).
Operating expense- An operating expense, operating expenditure, operational expense, operational expenditure or OPEX is an ongoing cost for running a product, business, or system. Its counterpart, a capital expenditure (CAPEX), is the cost of developing or providing non-consumable parts for the product or system. For example, the purchase of a photocopier is the CAPEX, and the annual paper, toner, power and maintenance cost is the OPEX. For larger systems like businesses, OPEX may also include the cost of workers and facility expenses such as rent and utilities.
Operating profit- In accounting, profit is the difference between price and the costs of bringing to market whatever it is that is accounted as an enterprise (whether by harvest, extraction, manufacture, or purchase) in terms of the component costs of delivered goods and/or services and any operating or other expenses.
