# Encyclopedia

Accountancy
Key concepts
Accountant · Bookkeeping · Trial balance · General ledger · Debits and credits · Cost of goods sold · Double-entry system · Standard practices · Cash and accrual basis · GAAP / IFRS
Financial statements
Balance sheet · Income statement · Cash flow statement · Equity · Retained earnings
Auditing
Financial audit · GAAS · Internal audit · Sarbanes–Oxley Act · Big Four auditors
Fields of accounting
Cost · Financial · Forensic · Fund · Management · Tax
.Income statement, also referred as profit and loss statement (P&L), earnings statement, operating statement or statement of operations,[1] is a company's financial statement that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as the "bottom line").^ Finally, income tax is deducted and you arrive at the bottom line: net profit or net losses.
• Beginners' Guide to Financial Statements 25 January 2010 19:20 UTC www.sec.gov [Source type: FILTERED WITH BAYES]

^ A company that manufactures or resells a product would generate sales revenue.
• Linking the Income Statement and Balance Sheet, Relationship, Business Bookkeeping Procedure 25 January 2010 19:20 UTC www.moneyinstructor.com [Source type: Reference]

^ The income statement and the balance sheet are linked by the net income of a company.
• Income statement - encyclopedia article - Citizendium 25 January 2010 19:20 UTC en.citizendium.org [Source type: FILTERED WITH BAYES]

.It displays the revenues recognized for a specific period, and the cost and expenses charged against these revenues, including write-offs (e.g., depreciation and amortization of various assets) and taxes.^ The charge for using these assets during the period is a fraction of the original cost of the assets.
• Beginners' Guide to Financial Statements 25 January 2010 19:20 UTC www.sec.gov [Source type: FILTERED WITH BAYES]

^ This process of spreading these costs is called depreciation or amortization.
• Beginners' Guide to Financial Statements 25 January 2010 19:20 UTC www.sec.gov [Source type: FILTERED WITH BAYES]

^ Companies spread the cost of these assets over the periods they are used.
• Beginners' Guide to Financial Statements 25 January 2010 19:20 UTC www.sec.gov [Source type: FILTERED WITH BAYES]

[1] .The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported.^ Review a company's Income Statement to see if that company has made or lost money during a defined time period.
• http://www.primeindustryreports.com/content/Income-Statement.htm 25 January 2010 19:20 UTC www.primeindustryreports.com [Source type: General]

^ The final income statements showed that the company over budgeted during the original budgeting phase.

^ The purpose of the income statement is to show a company's profitability during a specific period of time.
• Single-Step Income Statement - Tutorialized 25 January 2010 19:20 UTC www.tutorialized.com [Source type: FILTERED WITH BAYES]

.The important thing to remember about an income statement is that it represents a period of time.^ Income statement is important in everyone's life.
• Income Statement Introduction | Best Way To Invest 25 January 2010 19:20 UTC www.bestwaytoinvest.com [Source type: General]

^ The income statement is an important part of the financial statement.
• Accounting 101 – Income Statement: Financial Reporting and Analysis of Profit and Loss 25 January 2010 19:20 UTC bookkeeping.suite101.com [Source type: Academic]

^ The important thing to remember about an income statement is that it represents a period of time.

.This contrasts with the balance sheet, which represents a single moment in time.^ This contrasts the balance sheet, which represents a single moment in time.

^ (Remember that balance sheets are snapshots in time.
• Beginners' Guide to Financial Statements 25 January 2010 19:20 UTC www.sec.gov [Source type: FILTERED WITH BAYES]

^ A financial statement that reports an entity’s income for a period of tim e, usually for a fiscal quarter or fiscal year (as contrasted with the balance sheet , which shows the status of assets , liabilities and owner’s equities at one point in time).

.Charitable organizations that are required to publish financial statements do not produce an income statement.^ The income statement is an important part of the financial statement.
• Accounting 101 – Income Statement: Financial Reporting and Analysis of Profit and Loss 25 January 2010 19:20 UTC bookkeeping.suite101.com [Source type: Academic]

^ The income statement is one of the main financial statements.

^ Charitable organizations that are required to publish financial statements do not produce an income statement.
• Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES]
• Income Statement 25 January 2010 19:20 UTC www.slideshare.net [Source type: Reference]

.Instead, they produce a similar statement that reflects funding sources compared against program expenses, administrative costs, and other operating commitments.^ Operating costs and expenses .
• Income statement 25 January 2010 19:20 UTC www.yara.com [Source type: Reference]

^ Instead, they produce a similar statement that reflects funding sources compared against program expenses, administrative costs, and other operating commitments.

^ Other operating income/expense, net .
• SAP AG Annual Report 2008 - Consolidated Statements of Income 25 January 2010 19:20 UTC www.sap.com [Source type: News]

This statement is commonly referred to as the statement of activities. .Revenues and expenses are further categorized in the statement of activities by the donor restrictions on the funds received and expended.^ Instead, they produce a similar statement that reflects funding sources compared against program expenses, administrative costs, and other operating commitments.

^ The Income Statement report presents the net result of a company's revenues, minus expenses, over a given period of time.
• Income Statement 25 January 2010 19:20 UTC www.exceltip.com [Source type: Reference]

^ A financial statement which lists the revenues and expenses of a business organization for a stated period of time.
• income statement | Real Estate Dictionary | Sutton 25 January 2010 19:20 UTC www.sutton.com [Source type: News]

.The income statement can be prepared in one of two methods.^ Types of income statement: The income statement can be prepared in two types; Single Step Income Statement and Multi-step Income Statement.
• Income Statement Homework Help | Income Statement Online Tutoring | Income Statement Assignment Help | Help Income Statement Problem 25 January 2010 19:20 UTC www.tutorsonnet.com [Source type: FILTERED WITH BAYES]

^ The income statement is one of the main financial statements.

^ The income statement presents the results of the entity's operations during a period of time, such as one year.
• 4 Financial Statements 25 January 2010 19:20 UTC www.quickmba.com [Source type: Reference]

[2] .The Single Step income statement takes a simpler approach, totaling revenues and subtracting expenses to find the bottom line.^ At the final step, nonoperating revenues are added and nonoperating expenses are subtracted resulting in the net income.

^ If the bottom line of the income statement is positive then life is good.
• Income Statement | Setpoint Systems Blog 25 January 2010 19:20 UTC www.setpointusa.com [Source type: General]

^ When these expenses are subtracted from sales we have net income – literally the bottom line.
• Reading the Income Statement - Financial Education - Everything You Need To Know About Finance 25 January 2010 19:20 UTC financial-education.com [Source type: FILTERED WITH BAYES]

.The more complex Multi-Step income statement (as the name implies) takes several steps to find the bottom line, starting with the gross profit.^ If the bottom line of the income statement is positive then life is good.
• Income Statement | Setpoint Systems Blog 25 January 2010 19:20 UTC www.setpointusa.com [Source type: General]

^ The second is a multi-step income statement that calculates Gross Profit and Operating Income.
• Income Statement Template for Excel 25 January 2010 19:20 UTC www.vertex42.com [Source type: Reference]

^ An income statement is also known as a statement of profit and loss.
• Income statement - ArticleWorld 25 January 2010 19:20 UTC www.articleworld.org [Source type: FILTERED WITH BAYES]

.It then calculates operating expenses and, when deducted from the gross profit, yields income from operations.^ Other operating income and expenses .
• Consolidated Income Statement | Ericsson Annual Report 2008 25 January 2010 19:20 UTC www.ericsson.com [Source type: Academic]

^ This figure is arrived at by subtracting total operating expenses from gross profit.
• Income Statements: Small Business Accounting 25 January 2010 19:20 UTC www.businesstown.com [Source type: News]
• Income Statements, Accounting/Bookkeeping Article - Inc. Article 25 January 2010 19:20 UTC www.inc.com [Source type: News]
• Income Statements 25 January 2010 19:20 UTC www.jlz.com [Source type: FILTERED WITH BAYES]

^ At the second step, operating expenses are deducted.

.Adding to income from operations is the difference of other revenues and other expenses.^ Other operating income/expense, net .
• SAP AG Annual Report 2008 - Consolidated Statements of Income 25 January 2010 19:20 UTC www.sap.com [Source type: News]

^ Other operating income, net .
• SAP AG - Annual Report 2007 - Consolidated Statements of Income 25 January 2010 19:20 UTC www1.sap.com [Source type: News]

^ Other operating income/expense .
• Electrolux - Income statement 25 January 2010 19:20 UTC www.electrolux.com [Source type: Reference]

.When combined with income from operations, this yields income before taxes.^ Profit from operations before tax and finance income/(costs ) .
• Petrofac - Investors - Financial performance - Income statement 25 January 2010 19:20 UTC www.petrofac.com [Source type: News]

^ Income before income taxes 13.
• Financial Accounting Terms Dictionary of Definitions 25 January 2010 19:20 UTC accountingstudy.com [Source type: Reference]

^ Income before income taxes .
• LyondellBasell - Income Statement 25 January 2010 19:20 UTC www.lyondellbasell.com [Source type: Reference]
• Bank of America | Annual Report (2003) | Consolidated Statement of Income 25 January 2010 19:20 UTC www.bankofamerica.com [Source type: Reference]
• Volterra Reports Record Quarterly Revenue and Income and Ninth Consecutive Year of Growth (Nasdaq:VLTR) 25 January 2010 19:20 UTC www.globenewswire.com [Source type: Reference]
• Tennessee Commerce Bancorp Reports Net Income of $1.3 Million for Fourth Quarter - news from Boston.com 25 January 2010 19:20 UTC finance.boston.com [Source type: News] • Chron.com | News, search and shopping from the Houston Chronicle 25 January 2010 19:20 UTC markets.chron.com [Source type: News] • Volterra Reports Record Quarterly Revenue and Income and Ninth Consecutive Year of Growth - news from Boston.com 25 January 2010 19:20 UTC finance.boston.com [Source type: FILTERED WITH BAYES] • Volterra Reports Record Quarterly Revenue and Income and Ninth Consecutive Year of Growth - news from CBS MoneyWatch.com 25 January 2010 19:20 UTC finance.bnet.com [Source type: General] • Stock Market Information | FinancialContent.com 25 January 2010 19:20 UTC markets.chron.com [Source type: FILTERED WITH BAYES] • Volterra Reports Record Quarterly Revenue and Income and Ninth Consecutive Year of Growth - Yahoo! Finance 25 January 2010 19:20 UTC biz.yahoo.com [Source type: FILTERED WITH BAYES] .The final step is to deduct taxes, which finally produces the net income for the period measured.^ Deducting taxes from pre-tax profits yields the net income or profit for the enterprise. • Income Statement Homework Help | Income Statement Online Tutoring | Income Statement Assignment Help | Help Income Statement Problem 25 January 2010 19:20 UTC www.tutorsonnet.com [Source type: FILTERED WITH BAYES] ^ Net income = income before income taxes - income taxes . • Financial Accounting Terms Dictionary of Definitions 25 January 2010 19:20 UTC accountingstudy.com [Source type: Reference] ^ Income from discontinued operations, net of tax . • Royal Dutch Shell plc Financial and Operational Information 2003-2007 - Consolidated Statement of Income 25 January 2010 19:20 UTC www.faoi.shell.com [Source type: Reference] ## Contents ## Usefulness and limitations of income statement .Income statements should help investors and creditors determine the past financial performance of the enterprise, predict future performance, and assess the capability of generating future cash flows through report of the income and expenses.^ Cash Flow statement . • Financial Statement Links | Balance Sheet Walk 25 January 2010 19:20 UTC www.balancesheetwalk.com [Source type: FILTERED WITH BAYES] ^ The cash flows are not revealed in the income statement. • Financial Statement Links | Balance Sheet Walk 25 January 2010 19:20 UTC www.balancesheetwalk.com [Source type: FILTERED WITH BAYES] ^ Cash flow statements report a companys inflows and outflows of cash. • Beginners' Guide to Financial Statements 25 January 2010 19:20 UTC www.sec.gov [Source type: FILTERED WITH BAYES] However, information of an income statement has several limitations: • Items that might be relevant but cannot be reliably measured are not reported (e.g. brand recognition and loyalty). • Some numbers depend on accounting methods used (e.g. using FIFO or LIFO accounting to measure inventory level). • Some numbers depend on judgments and estimates (e.g. depreciation expense depends on estimated useful life and salvage value).  - INCOME STATEMENT BOND LLC - For the year ended DECEMBER 31 2007$         $Debit Credit Revenues GROSS PROFIT (including rental income) 496,397 -------- Expenses: ADVERTISING 6,300 BANK & CREDIT CARD FEES 144 BOOKKEEPING 3,350 EMPLOYEES 88,000 ENTERTAINMENT 5,550 INSURANCE 750 LEGAL & PROFESSIONAL SERVICES 1,575 LICENSES 632 PRINTING, POSTAGE & STATIONERY 320 RENT 13,000 RENTAL MORTGAGES AND FEES 74,400 TELEPHONE 1,000 UTILITIES 491 -------- TOTAL EXPENSES (195,512) -------- NET INCOME 300,885 ========  ## Items on income statement ### Operating section . • Revenue - Cash inflows or other enhancements of assets of an entity during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major operations.^ Revenues are realized when products or other assets are exchanged for cash or claims to cash or when services are rendered. • Income Statements - advantage, type, benefits, cost, Terms on the income statement, Principles for recognizing revenues and expenses, Formats of the income statement 25 January 2010 19:20 UTC www.referenceforbusiness.com [Source type: Reference] ^ Expenses are outflows or other uses of assets during a period as a result of delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations. • Income Statements - Encyclopedia - Business Terms 25 January 2010 19:20 UTC www.inc.com [Source type: FILTERED WITH BAYES] ^ Revenue refers to inflows from the delivery or manufacture of a product or from the rendering of a service. • 4 Financial Statements 25 January 2010 19:20 UTC www.quickmba.com [Source type: Reference] .It is usually presented as sales minus sales discounts, returns, and allowances. • Expenses - Cash outflows or other using-up of assets or incurrence of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.^ Revenues are realized when products or other assets are exchanged for cash or claims to cash or when services are rendered. • Income Statements - advantage, type, benefits, cost, Terms on the income statement, Principles for recognizing revenues and expenses, Formats of the income statement 25 January 2010 19:20 UTC www.referenceforbusiness.com [Source type: Reference] ^ Expenses are outflows or other uses of assets during a period as a result of delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations. • Income Statements - Encyclopedia - Business Terms 25 January 2010 19:20 UTC www.inc.com [Source type: FILTERED WITH BAYES] ^ Prepaid expenses and other current assets . • Volterra Reports Record Quarterly Revenue and Income and Ninth Consecutive Year of Growth (Nasdaq:VLTR) 25 January 2010 19:20 UTC www.globenewswire.com [Source type: Reference] • Volterra Reports Record Quarterly Revenue and Income and Ninth Consecutive Year of Growth - news from Boston.com 25 January 2010 19:20 UTC finance.boston.com [Source type: FILTERED WITH BAYES] • Volterra Reports Record Quarterly Revenue and Income and Ninth Consecutive Year of Growth - news from CBS MoneyWatch.com 25 January 2010 19:20 UTC finance.bnet.com [Source type: General] • Volterra Reports Record Quarterly Revenue and Income and Ninth Consecutive Year of Growth - Yahoo! Finance 25 January 2010 19:20 UTC biz.yahoo.com [Source type: FILTERED WITH BAYES] . • General and administrative expenses (G & A) - represent expenses to manage the business (officer salaries, legal and professional fees, utilities, insurance, depreciation of office building and equipment, office rents, office supplies) • Selling expenses - represent expenses needed to sell products (e.g., sales salaries, commissions and travel expenses, advertising, freight, shipping, depreciation of sales store buildings and equipment) • Selling General and Administrative expenses (SG&A or SGA) - consist of the combined payroll costs (salaries, commissions, and travel expenses of executives, sales people and employees), and advertising expenses a company incurs.^ General and administrative expenses (G & A) - represent expenses to manage the business (officer salaries, legal and professional fees, utilities, insurance, depreciation of office building and equipment, stationery, supplies) Selling expenses - represent expenses needed to sell products (e.g., sales salaries and commissions, advertising, freight, shipping, depreciation of sales equipment) R & D expenses - represent expenses included in research and development Depreciation - is the charge for a specific period (i.e. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] ^ Legal and professional fees . • Income Statement 25 January 2010 19:20 UTC knightinsurancegroup.com [Source type: FILTERED WITH BAYES] • Income Statement Homework Help | Income Statement Online Tutoring | Income Statement Assignment Help | Help Income Statement Problem 25 January 2010 19:20 UTC www.tutorsonnet.com [Source type: FILTERED WITH BAYES] ^ Sales The sales figure represents the amount of revenue generated by the business. • Income Statements, Accounting/Bookkeeping Article - Inc. Article 25 January 2010 19:20 UTC www.inc.com [Source type: News] SGA is usually understood as a major portion of non-production related costs, opposing production related costs such as raw material and (direct) labour • R & D expenses - represent expenses included in research and development • Depreciation - is the charge for a specific period (i.e. year, accounting period) with respect to fixed assets that have been capitalised on the balance sheet. ### Non-operating section . • Other revenues or gains - revenues and gains from other than primary business activities (e.g.^ Non-operating section Other revenues or gains - revenues and gains from other than primary business activities (e.g. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] ^ Revenues from primary activities 2. ^ Less cost of goods sold Equals gross profit Less operating expenses Equals operating income Plus other revenues and gains . rent, patents). .It also includes unusual gains and losses that are either unusual or infrequent, but not both (e.g.^ Extraordinary gains and losses arise from events which are both unusual and infrequent. ^ Gains and losses that are not extraordinary refer to significant financial transactions that are unusual or infrequent, but not both. ^ Gains and losses that are not extraordinary refer to material items which are unusual or infrequent, but not both. • Income Statements - advantage, type, benefits, cost, Terms on the income statement, Principles for recognizing revenues and expenses, Formats of the income statement 25 January 2010 19:20 UTC www.referenceforbusiness.com [Source type: Reference] sale of securities or fixed assets) • Other expenses or losses - expenses or losses not related to primary business operations. ### Irregular items .They are reported separately because this way users can better predict future cash flows - irregular items most likely will not recur.^ They are reported separately because this way users can better predict future cash flows - irregular items most likely won't happen next year. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] ^ Income statements should help investors and creditors determine the past performance of the enterprise, predict future performance, and assess the capability of generating future cash flows. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] ^ A forward P/E is always a better way to view the whole value idea, but naturally there are problems deciding exactly what the future earnings growth is likely to be. .These are reported net of taxes.^ These are reported net of taxes. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] ^ Extraordinary items are reported net of income taxes. • Income Statements - advantage, type, benefits, cost, Terms on the income statement, Principles for recognizing revenues and expenses, Formats of the income statement 25 January 2010 19:20 UTC www.referenceforbusiness.com [Source type: Reference] • Income Statements - Encyclopedia - Business Terms 25 January 2010 19:20 UTC www.inc.com [Source type: FILTERED WITH BAYES] ^ Although these lines can be reported in various orders, the next line after net revenues typically shows the costs of the sales. • Beginners' Guide to Financial Statements 25 January 2010 19:20 UTC www.sec.gov [Source type: FILTERED WITH BAYES] . • Discontinued operations is the most common type of irregular items.^ Discontinued operations is the most common type of irregular items. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] ^ These additional special items may be one of three types: discontinued operations, extraordinary items, and changes in accounting principles. • Accounting Principles II: Income Statement - CliffsNotes 25 January 2010 19:20 UTC www.cliffsnotes.com [Source type: FILTERED WITH BAYES] .Shifting business location, stopping production temporarily, or changes due to technological improvement do not qualify as discontinued operations. • Extraordinary items are both unusual (abnormal) and infrequent, for example, unexpected natural disaster, expropriation, prohibitions under new regulations.^ Gains and losses that are not extraordinary refer to material items which are unusual or infrequent, but not both. • Income Statements - advantage, type, benefits, cost, Terms on the income statement, Principles for recognizing revenues and expenses, Formats of the income statement 25 January 2010 19:20 UTC www.referenceforbusiness.com [Source type: Reference] ^ Note: natural disaster might not qualify depending on location (e.g. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] ^ Extraordinary items are both unusual (abnormal) and infrequent, for example, unexpected nature disaster, expropriation, prohibitions under new regulations. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] Note: natural disaster might not qualify depending on location (e.g. frost damage would not qualify in .Canada but would in the tropics). • Changes in accounting principle is, for example, deciding to depreciate an investment property that has previously not been depreciated.^ Changes in accounting principle is, for example, deciding to depreciate an investment property that has previously not been depreciated. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] ^ Cumulative effect of changes in accounting principles . ^ Canada but would in the tropics). • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] .However, changes in estimates (e.g.^ However, changes in estimates (e.g. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] estimated useful life of a fixed asset) do not qualify. ### Earnings per share .Because of its importance, earnings per share (EPS) are required to be disclosed on the face of the income statement.^ Primary earnings per share and fully diluted earnings per share may also be required. • Income Statements - advantage, type, benefits, cost, Terms on the income statement, Principles for recognizing revenues and expenses, Formats of the income statement 25 January 2010 19:20 UTC www.referenceforbusiness.com [Source type: Reference] ^ Earnings per share (cents) . • Standard Bank - Annual report 2005 : Income statement 25 January 2010 19:20 UTC www.standardbank.co.za [Source type: News] ^ Diluted income per ordinary share . • Chron.com | News, search and shopping from the Houston Chronicle 25 January 2010 19:20 UTC markets.chron.com [Source type: News] .A company which reports any of the irregular items must also report EPS for these items either in the statement or in the notes.^ A company which reports any of the irregular items must also report EPS for these items either in the statement or in the notes. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] ^ The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported. • Income Statements -- Fundamental Analysis 25 January 2010 19:20 UTC edinformatics.com [Source type: FILTERED WITH BAYES] ^ This is different than the standard Gross Margin income statement that companies normally use when reporting (based on absorption costing). • GloboTrends wiki for Global Business / income statement 25 January 2010 19:20 UTC globotrends.pbworks.com [Source type: FILTERED WITH BAYES] • Kooky Plan: the wiki for entrepreneurs / income statement 25 January 2010 19:20 UTC kookyplan.pbworks.com [Source type: FILTERED WITH BAYES] • Kooky Plan: the wiki for entrepreneurs / income statement 25 January 2010 19:20 UTC kookyplan.pbworks.com [Source type: FILTERED WITH BAYES] $ext{Earnings per share} = \frac{ ext{Net income} - ext{Preferred stock dividends}}{ ext{Weighted average of common stock shares outstanding}}$ There are two forms of EPS reported: . • Basic: in this case "weighted average of shares outstanding" includes only actual stocks outstanding. • Diluted: in this case "weighted average of shares outstanding" is calculated as if all stock options, warrants, convertible bonds, and other securities that could be transformed into shares are transformed.^ Diluted weighted average common shares outstanding (d) . • Halliburton Announces Fourth Quarter Earnings of$0.28 Per Diluted Share Excluding Receivable Settlement Charge - news from Boston.com 25 January 2010 19:20 UTC finance.boston.com [Source type: FILTERED WITH BAYES]
• Stock Market Information | FinancialContent.com 25 January 2010 19:20 UTC studio.financialcontent.com [Source type: Reference]
• Stock Market Information | FinancialContent.com 25 January 2010 19:20 UTC business.kdka.com [Source type: Reference]

^ Average common shares outstanding: .
• Stock Market Information | FinancialContent.com 25 January 2010 19:20 UTC markets.chron.com [Source type: FILTERED WITH BAYES]

^ Weighted average shares used to compute .
• PE.com | Southern California News | News for Inland Southern California 25 January 2010 19:20 UTC markets.pe.com [Source type: News]

.This increases the number of shares and so EPS decreases.^ EPS is calculated by taking total earnings and dividing by the number of shares outstanding.

^ Basic EPS is computed by dividing net income allocated for common stock by the weighted-average number of common shares outstanding.
• Form 10-Q 25 January 2010 19:20 UTC www.sec.gov [Source type: FILTERED WITH BAYES]

^ The final thing I want to mention is that rather than simply looking at the absolute earnings number shown, it is better to look at earnings per share (EPS).

Diluted EPS is considered to be a more reliable way to measure EPS.
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STATEMENTS OF INCOME

Revenues                             $12,580.2$  10,900.4     $8,290.3 Cost of sales 6,740.2 5,650.1 4,524.2 ------------------------------------------------------------------------------ Gross profit 6,835.0 5,657.3 3,270.1 Selling, general and administrative expenses 3,624.6 3,296.3 3,034.0 Other (income) expense, net 1,100.3 (20.0) 18.0 ------------------------------------------------------------------------------ Operating profit 2,122.1 2,166.0 2,013.1 Interest expense, net 119.7 124.1 142.8 ------------------------------------------------------------------------------ Income before income taxes 2,102.4 1,980.9 1,870.3 Provision for income taxes 680.3 620.6 582.0 ------------------------------------------------------------------------------ Net income$ 1,720.1    $1,421.3$  1,190.3
------------------------------------------------------------------------------

                                VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
----------------------------------------------------------------------------------------------
Year Ended December 31,                                   2004         2003         2002
----------------------------------------------------------------------------------------------
Revenues                                               $22,525.9$ 20,827.6   $19,186.8 Expenses: Operating 12,545.8 11,879.8 10,735.5 Selling, general and administrative 4,142.1 3,732.3 3,498.6 Depreciation and amortization 809.9 741.9 711.8 Impairment charge (Note 3) 17,997.1 — — ---------------------------------------------------------------------------------------------- Total expenses 35,494.9 16,354.0 14,945.9 ---------------------------------------------------------------------------------------------- Operating income (loss) (12,969.0) 4,473.6 4,240.9 Interest expense (718.9) (742.9) (799.1) Interest income 25.3 11.7 12.0 Other items, net 7.6 (3.0) (32.9) ---------------------------------------------------------------------------------------------- Earnings (loss) from continuing operations before income taxes, equity in earnings (loss) of affiliated companies and minority interest (13,655.0) 3,739.4 3,420.9 Provision for income taxes (1,378.6) (1,497.0) (1,338.3) Equity in earnings (loss) of affiliated companies, net of tax (20.8) .1 (37.3) Minority interest, net of tax (5.1) (4.7) (3.3) ---------------------------------------------------------------------------------------------- Net Income (loss) from continuing operations (15,059.5) 2,237.8 2,042.0 ---------------------------------------------------------------------------------------------- Discontinued operations (Note 2): Earnings (loss) from discontinued operations (1,182.7) (718.8) 255.3 Income taxes, net of minority interest 92.4 (83.6) (90.7) ---------------------------------------------------------------------------------------------- Net Income (loss) from discontinued operations (1,090.3) (802.4) 164.6 ---------------------------------------------------------------------------------------------- Net Income (loss) before cumulative effect of accounting change (16,149.8) 1,435.4 2,206.6 Cumulative effect of accounting change, net of minority interest and tax (Note 1) (1,312.4) (18.5) (1,480.9) ---------------------------------------------------------------------------------------------- Net Income (loss)$ (17,462.2)   $1,416.9$   725.7
----------------------------------------------------------------------------------------------

Fig I-3


## Bottom line

."Bottom line" is the net income that is calculated after subtracting the expenses from revenue.^ At the final step, nonoperating revenues are added and nonoperating expenses are subtracted resulting in the net income.

^ Net income, or the "bottom line," is the excess of all revenues and gains for a designated period over all expenses and losses of that period.

^ Net Farm Income from Operations Subtract gross farm expenses from gross farm revenue.
• Your Farm Income Statement - File C3-25 August 2008 25 January 2010 19:20 UTC www.extension.iastate.edu [Source type: FILTERED WITH BAYES]

.Since this forms the last line of the income statement, it is informally called "bottom line."^ People often call this the bottom line.
• Beginners' Guide to Financial Statements 25 January 2010 19:20 UTC www.sec.gov [Source type: FILTERED WITH BAYES]

^ Finally, income tax is deducted and you arrive at the bottom line: net profit or net losses.
• Beginners' Guide to Financial Statements 25 January 2010 19:20 UTC www.sec.gov [Source type: FILTERED WITH BAYES]

^ This post examines Intel's Income Statement for the quarter and compares the entries on each line to our "look-ahead" estimates .
• Intel Income Statement Analysis for the December 2009 Quarter -- Seeking Alpha 25 January 2010 19:20 UTC seekingalpha.com [Source type: General]

.It is important to investors as it represents the profit for the year attributable to the shareholders.^ Net profit attributable to UBS shareholders .
• UBS - Income Statement 25 January 2010 19:20 UTC www.ubs.com [Source type: Reference]

^ It is also important to look at how a company’s profit margin has changed over time (say over a period of 5-6 years).

^ A company's ability to operate profitably is important to current lenders and investors, potential lenders and investors, company management, competitors, government agencies, labor unions, and others.

## Notes

1. ^ a b Helfert, Erich A. (2001). "The Nature of Financial Statements: The Income Statement". Financial Analysis - Tools and Techniques - A Guide for Managers. McGraw-Hill. p. 40. doi:10.1036/0071395415.
2. ^ Warren, Carl (2008). Survey of Accounting. Cincinnati: South-Western College Pub. p. 128-132. ISBN 9780324658262.

## References

• Harry I. Wolk, James L. Dodd, Michael G. Tearney. Accounting Theory: Conceptual Issues in a Political and Economic Environment (2004). ISBN 0324186231.
• Angelico A. Groppelli, Ehsan Nikbakht. Finance (2000). ISBN 0764112759.
• Barry J. Epstein, Eva K. Jermakowicz. .Interpretation and Application of International Financial Reporting Standards (2007).^ Impacts of the adoption of New Zealand Equivalents to International Financial Reporting Standards .
• Income Statement 25 January 2010 19:20 UTC www.waikato.ac.nz [Source type: Academic]

ISBN 9780471798231.
• Jan R. Williams, Susan F. Haka, Mark S. Bettner, Joseph V. Carcello. Financial & Managerial Accounting (2008). ISBN 9780072996500.

# Citable sentences

Up to date as of December 20, 2010

Here are sentences from other pages on Income statement, which are similar to those in the above article.