Dr. Kirch
Acct 303
Income Statement
Presentation
May 20, 2009
Intermediate Accounting 303
Team 3: Ryan McKay
Cheer Cheng
Kristen Jeffries

Attributed to FASB Statement of accounting
concept 5 ¶ 30:51


AKA Earnings Statement
Discloses changes to the company including:

Causes of changes to assets and liabilities

Results of major or ongoing operations

Results of the company’s transactions

Uses of the Income Statement

Performance report for stated period.
 Used to analyze future performance as well (5 ¶ 36)


Considers risk and financial standing of the
company in its current period
Limitations of an Income Statement

The Net income reported is a best “estimation”
 Takes into account several assumptions and
considerations

Net income can be altered by different accounting
methods
 Example: Enron : Mark-to-Market

Single Step Income Statement

Expenses are deducted from revenue to get net
income

Not the best form to use
 Gives a very rough estimate

Very easy to use and simple

Multi-Step Income Statement

Operating Section

Non-Section

Income Tax

Discontinued Operations

Extraordinary Items

Discloses Earning Per Share
CK, Inc.
Income Statement
For the Year Ended December 31, 2008
Sales
Cost of Goods Sold
Gross Margin
Operating Expenses
Wage Expense
Rent Expense
Advertising Expense
Depreciation Expense
Bad Debt Expense
Insurance Expense
Total Operating Expenses
Income Before Other Items, Other Revenue
and Expenses, and Taxes
Other Items Affecting Operating Income
Gain on Sale of Fixed Assets
Income From Operations
Other Revenues & <Expenses>
Interest Expense
Income Before Taxes
Tax Expense
$ 400,000
221,000
179,000
$
39,000
48,000
12,000
8,950
3,490
1,200
112,640
66,360
1,000
67,360
(10,400)
77,760
9,240
Net Income
Earnings per Share
$
$
68,520
3.70

Condensed Income Statement

Includes only the total expense in groups
 Uses supplementary schedules to support the
reconciliation of the expenses

Can be presented in various forms

Irregular Items affecting an Income Statement

Discontinued Operations

Extraordinary Items

Unusual gains and/or losses

Disclosure requirement-Items affecting
earnings

Must state income tax

Change in accounting principles

Correction of previous errors