Introduction to the Income Statement

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來自 University of Virginia 的課程

Financial Accounting Fundamentals

277 個評分

University of Virginia

Financial Accounting Fundamentals

277 個評分

This course will teach you the tools you'll need to understand the fundamentals of financial accounting. Concise videos, the financial records of a small business, and "your turn" activities guide you through the three most commonly used financial statements: the Balance Sheet, the Income Statement, and the Statement of Cash Flows. Beyond recording transactions, you'll learn how to prepare these financial statements, and read and analyze them to draw basic conclusions about a company's financial health. By the end of this course, you will be able to: - Use journal entries to record transactions; - Prepare and use t-accounts to summarize transactions recorded during an accounting period; - Describe the three most commonly used financial statements and how they fit together; - Prepare these financial statements based on transactions recorded during an accounting period; and - Draw basic conclusions about a company's financial health.

從本節課中

The Income Statement, Revenue and Expense Transactions, and Adjusting Entries

Now that we’ve learned the fundamentals of recording transactions, we’re ready to dive into another financial statement: the Income Statement (IS). After learning about the Income Statement, we’ll record revenue and expense transactions, and summarize these transactions in a special account. Finally, we'll record adjusting entries in accordance with accrual accounting, prior to the preparation of the financial statements.

Introduction to the Income Statement3:04

The Income Statement: A Summary2:49

與講師見面

Luann J. Lynch
Almand R. Coleman Professor of Business Administration
Darden School of Business

Let's talk now about the income statement.

Here's the example of the income statement taken from PepsiCo's annual report.

We could pull up an income statement from just about any company.

We'll see several things in common.

The first is we'll find out how much revenue the company generated.

The second thing we'll see is we'll find a list of expenses that the company incurred

to generate those revenues.

That list will differ depending on what type of company we're looking at.

And then we should see that the company subtracted the expenses from the revenues

and will tell us what its net income is,

where net income is revenues minus expenses.

If you've not seen an income statement before or if some of these terms are terms

you haven't heard before, then again you're in the right place.

Let's talk about the income statement in more detail.

The income statement shows the results of operations, over a period of time.

And remember the balance sheet showed us a financial position

at different points in time and

income statement shows us the results of operations over a period of time.

So it's not cumulative like the balance sheet is from the inception of

the company, is just accumulating transactions over a period time.

It starts with revenues that the company has generated.

Now what are revenues?

Those are increases in owner's equity that result from selling products or

services to the company's customers.

So revenues serve to increase owners' equity.

From revenues, we see expenses subtracted on the income statement.

Well, what are expenses?

Well you might expect, given what we said revenues were, that expenses are decreases

in owners' equity from the costs that the company incurs to generate those revenues.

Some examples would be cost of goods sold.

So, if a company is in the business of selling products to customers, the cost of

goods sold will tell us the cost of the products that were sold to the customers.

Or perhaps, salary expense,

the cost that we have incurred to pay the people that work for us.

Or, another example is depreciation expense.

Which is the cost of using buildings and equipment during the current period

of the income statement to generate revenues during that period.

If we subtract the expenses from the revenues we're left with net earnings or

sometimes very frequently in fact, this is called net income, or net profit.

These terms are used interchangeably.

Net earnings of course would be the increase in owner's equity from

the company's operating activities or

more cleverly described as revenues minus expenses.

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