History

1. The Income Statement purpose is: to present the details of an economic entity’s accrual-based (not cash-based) profitability for a period, by presenting revenues, expenses, gains and losses in an organized structure with category subtotals, supplemented by earnings per share for existing outstanding shares (basic) and potentially outstanding shares (diluted) of Common Stock. |

2. Gross margin reports the amount of net sales revenue remaining after the deduction of the cost of the goods sold; this amount, combined with any other revenue and gain sources, is what the economic entity has available to cover a. All other expenses and losses for the period, as well as b. Any net profit. |

3. Operating income: reports the net amount generated by the economic entity from operations (not investing or financing); that is, operating income is the amount of net sales revenue remaining after the deduction of the cost of the goods sold and operating (also called SG&A) expenses; this amount, combined with any other revenue sources, is what the economic entity has available to cover: a. All non-operating expenses and losses for the period, as well as b. Any net profit. |

4. Non-operating income: reports items arising from investing and financing activities: the revenues (such as interest or dividend revenue), gains (realized or Trading Security unrealized), expenses (such as interest expense) and losses (realized or Trading Security unrealized); this amount supplements operating income to cover c. Income tax provision (savings), d. Any special items, as well as c. Any net income. |

5. Net income (and Earnings Per Share): reports the total amount of profit (and profit for each share of Common Stock) generated by the economic entity during the period, after considering all earned revenues, matched expenses, gains and losses, other than those which bypass the Income Statement and go directly to AOCI in Equity on the...