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The Income Statement

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					The Income Statement
             The Purpose
 An income statement reports a business’s
  income and expenses for a fiscal period
 It is sometimes called the profit loss
  statements, the statement of income and
  expenses, or the statement of earnings
                Income
 Money that is earned by the business from
  a variety of sources
 Sometimes called revenue
                Expenses
 The money the business has spent in
  order to produce income
 This includes salaries, rent, daily operating
  costs and cost of supplies
 Difference between Expenses and
             Liabilities
 Expenses have already been paid,
  liabilities have not
 Expenses are on the income statement
  because they must be subtracted from the
  income during a given period
 Liabilities appear because they are a claim
  by creditors against the value of the
  business until they are paid
    What does an Income Statement
               Tell you?
 Net income of a business is total income
  minus total expenses
 You can see trends in expenses – where
  does the money go –
 Income statements can also help forecast
  the future of the business – what will the
  income be, say, a year from now
 It also updates the balance sheet

				
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posted:8/7/2012
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