Elements of the Income Statement The income statement consists of revenues (money received from the sale of products and services, before expenses are taken out, also known as the “top line”) and expenses, along with the resulting net income or loss over a period of time due to earning activities.

What are the two components of financial statement?

A set of financial statements includes two essential statements: The balance sheet and the income statement.

Which is an element of the income statement?

Profits or Loss is also one of the elements of the income statement. However, this element does not has its own treatment or measurement. It is the result of residual of other elements of the income statement. Revenues and Expenses.

Where are sales revenues shown on the income statement?

The sub-element of sales revenues is not directly shown in the income statement. They are normally present in the noted to the income statement. The sub-element of income statement normally is the class of products or services that entity offer and sales during the period. Expenses are the second element of the income statement.

What do you call the end product of an income statement?

Intermediate Accounting For Dummies. The income statement shows the business’s income, expenses, gains, and losses. The end product of these transactions is net income or loss. Some also call the income statement a statement of profit and loss, or P&L.

What makes up an income statement under GAAP?

Generally accepted accounting practices (GAAP) also refer to this report as statement of income because the income statement shows not only income and expenses from continuing operations (which basically is revenue minus expenses), but also income from myriad sources, such as the gain or loss that results when a company sells an asset.