Income Statement

Income Statement

Student Name:

Instructor’s name: Erica Carson-Brown

Course title: ACC 557

28th May2011

Income Statement

Income statement is also widely known as profit and loss statement. It summarizes the revenues and expenditures of a firm or even an individual can use the income statement to analyze the savings over a period of time. It is a company’s financial statement that indicates how the revenue is transformed in to the net income. The net income or loss is calculated by deducting expenses from the revenues. If the expenses are less than the revenue then the income statement shows a net profit otherwise a net loss is shown. (Needles, 2008)

Use of Income Statement in Everyday Life

Income statement can be used by individuals in everyday life to determine the revenues that they are earning through their jobs or businesses and how much saving are they able to make. The everyday expenses like food, conveyance, rent, clothing etc. can be deducted from the revenues or salary using an income statement. This can even be used by the house wives to manage the daily accounts of home. (Label, 2010)

The house wives can allocate a specific amount for the expenses of kitchen and home. This allotted amount would act as the revenue in the income statement. The expenses can be then matched with the income and a proper record can be maintained. In the end the house wife would be able to determine that whether the expenses have exceeded the limit set by the revenue or is she able to save some money. The income statement can also be used by her to determine the areas where she needs to control the budget in order to save revenue. The house wife can also calculate the breakeven point for expenses so that she could manage effectively in a given amount of revenue. (Needles, 2008)

Companies are supposed to publish their financial statements at the end of the fiscal year. These are to be published in the newspaper or any other medium that...