Income Statement Flashcards
Provide answers to the question “What were the company’s operating results for the period?”
Income Statement
Statement of Comprehensive Income
Statement of Operations
Revenue realized through primary activities is often referred to as _____. For a company manufacturing a product, or for a wholesaler, distributor, or retailer involved in the business of selling that product, the revenue from primary activities refers to revenue achieved from the sale of the product
Operating Revenue
Revenue realized through secondary, noncore business activities is often referred to as ______. This revenue is sourced from the earnings that are outside the purchase and sale of goods and services and may include income from interest earned on business capital parked in the bank, rental income from business property, income from strategic partnerships like royalty payment receipts, or income from an advertisement display placed on business property.
Non-operating/Recurring Revenue
Also called other income, ____ indicate the net money made from other activities, like the sale of long-term assets. These include the net income realized from one-time nonbusiness activities, such as a company selling its old transportation van, unused land, or a subsidiary company.
Gains
The cost for a business to continue operation and turn a profit is known as _____.
Expense
These are all expenses incurred for earning the normal operating revenue linked to the primary activity of the business. They include cost of goods sold (COGS); selling, general and administrative (SG&A) expenses; depreciation or amortization; and research and development (R&D) expenses. Typical items that make up the list are employee wages, sales commissions, and expenses for utilities such as electricity and transportation.
Primary Activity Expenses
These are all expenses linked to noncore business activities, like interest paid on loan money.
Secondary-Activity Expenses
when total expenses (including taxes, fees, interest, and depreciation) exceed the income or revenue produced for a given period of time.
Net Loss
When you subtract the expenses and costs from revenue, the result will be either positive or negative. A positive result is called
Net Income
includes revenues, expenses, gains, and losses that have yet to be realized and are excluded from net income on an income statement. It represents the balance between net income and comprehensive income.
Other Comprehensive Income
is a company’s net profit divided by the number of common shares it has outstanding. ____ indicates how much money a company makes for each share of its stock and is a widely used metric for estimating corporate value.
Earnings per share
Earnings per share formula
EPS = (Net Income – Preferred Dividends) / End of period Shares Outstanding
EPS = (Net Income – Preferred Dividends) / Weighted Average Shares Outstandin
are the opposing financial results that will be produced through a company’s non-primary operations and production processes.
Gains and losses
Any time a company produces a profit or realizes increased value through secondary sources, such as via lawsuits, investments in financial instruments, or through the disposal of assets, it is considered to be a (capital) _____.
Gain
is realized whenever a company loses money through secondary activity. If a company sells an asset, the determination of gain versus loss is dependent on the book value of the asset according to the company’s financial documents.
Loss
