Income Statement

Question 0

What does the Income Statement Show?

Answer 0

Sales
Returns
Costs
Unexpected Expenses
Income Tax Liability

Question 1

Income Statement Definition and Formula

Answer 1

A summary of a company’s profit and loss over a specific time period (usually a full year or part of a year)

Income Statement = Profit & Loss Statement

Question 2

Income Statement: Formula

Answer 2

Revenue - Cost of Goods Sold = Gross Margin (Gross Profit)
Then,
Gross Margin - Operating Expenses = Net Income

Question 3

Income Statement: What does the top line of the IS list?

Answer 3

The top line lists the Total Revenue that comes from products and services, often called “Gross Revenue, Sales or Income.”
Note: Gross Revenue is all the earned but not necessary _____ collected yet.

Question 4

Income Statement: What is the formula for Net Sales?

Answer 4

Gross Revenues - Returns & Discounts = Net Sales

Question 5

Income Statement: Cost of Goods Sold? Cost of Goods Sold is also known as, what? Examples?

Answer 5

Costs associated with making the product. Also known as Variable Expense. Raw Materials, Labor, Shipping the Product.

Question 6

Income Statement: What is the complete formula?

Answer 6

Gross Revenue - Returns & Discounts = Net Sales - Cost of Goods Sold = Gross Margin - Operating Expenses =

Question 7

Income Statement: Operating Expenses?

Answer 7

The Fixed Cost to operate your business, such as marketing & advertising, salaries, rent, insurance, utilities and depreciation; which is a annual expense such as copiers, computer equipment, etc., over a span of time.

Question 8

Income Statement: Operating Expense Formula

Answer 8

Gross Margin - Operating Expenses = Operating Income

Question 9

Income Statement: Operating Income or “Earnings Before Interest & Taxes (EBIT)” is divided into 2 categories? Formula?

Answer 9

Interest Income: The money you make from savings
Interest Expense: The money you pay on loans

Operating Income - Interest Income - Income Tax = Net Income or Net Earnings

Question 10

Income Statement: What does Net Income tell you?

Answer 10

It tells you how much the company actually (earned or lost) during a specific period.

Note: Net Income is also referred as the “Bottom Line”

Question 11

Income Statement: When IS calculates EPS, what does it tell? Formula?

Answer 11

It tells us how much money each shareholder would receive for each shareholder stock they own if the company distributed the net income.
EPS = Total Net Income divided by # of Outstanding Shares