Section 1: The Income Statement

The video below provides a quick overview of Financial Statement basics.  You will learn several terms and methods of managing financial records.  This video will prepare you as we begin with the Income Statement, detailed below.

The Income Statment

The Income Statement may be the one most familiar to most people. It very simply lays out revenues and expenses of an organization for a period of time. Usually, these are presented for a monthly, quarterly or annual period. There is a specific format that should be followed in preparing an income statement, as they universally begin first with Revenue, which is money earned from a business’s regular operations, then Expenses, then Gains and Losses (from non-operating or unusual activities), then Net Income. More details about each item can be found in this article.

In this article you can see all of the figures presenting within the Income Statement become a historical reference and record of prices and details that were true for that statement period.

Reflections

Think about the video and article presented above.  How can financial statements, specifically the Income Statement, provide data to an organization about their past, present, and possible future abilities?