Income Statement

Question 1

What’s the purpose of the multi-step I/S?

Answer 1

gross profit (margin), operating profit (margin), and pretax income from continuing operations are determined and shown seperately. The focus is on the determination of operating profit rather than simply income from continuing operations. Thus, total expenses are not subtracted from total revenues, but both revenues and expenses would be broken down into operating and other revenues and expenses.

Question 2

What are revenues?

Answer 2

Increases in Net Assets or settlement liabilities from Primary Activities

Question 3

What are expenses?

Answer 3

Decreases in Net Assets or incurrence of liabilities from Primary Activities

Question 4

What are gains?

Answer 4

Increase in Net Assets from incidental activities

Question 5

What are losses?

Answer 5

Decrease in Net Assets from incidental activities

Question 6

What is Gain on Sale of disposal of a discontinued operation?

Answer 6

not revenue, but should be disclosed below income from continuing operations and included in NI

Question 7

What is loss on Sale of disposal of a discontinued operation?

Answer 7

does not affect revenue but is disclosed below income from continuing operations and excluded from NI