The income statement is one of the elements of financial statements. This statement is sometimes called the statement of financial performance because it records and presents the entity’s performance financially from period to period. For example, if you obtain the entity’s income statement for the period from 01 January to 31 December 2017, you will […]
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Overview: The balance sheet is one of the most important elements of financial statements. This statement shows the entity’s financial position at the point in time. What we mean by financial position is that this statement tells us how the entity’s assets, liabilities as well equity are at a specific time frame. For example, if
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Definition: Liabilities are the present obligation of the entity in the form of legally enforceable and result from past events. Liabilities will have future economic outflow from an entity. Those liabilities including account payable, salary payable, noted payable, accrual liabilities, short term loan, and long term loan. If the entity financial statements are prepared according
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Definition: Assets are resources that control by the entity and those resources are expected to have an economic inflow into the entity in the future. Those assets included cash, account receivables, care, computer equipment, land, building, and other resources the entity controls. The balance sheet is one of five financial statements that report the entity’s
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Definition: The single-step income statement is the format used to prepare an income statement where revenues, expenses, and net income are presented into a single subtotal. For example, the revenue section records all types of revenues no matter those revenues are from the operation or non-operation. For example, interest income, revaluation gain, or gain on
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Definition: The multiple-step income statement is the template that use to prepare an income statement by recording the operating income and operating expenses separately from non-operating income and non-operating expenses. That means before figuring out how much profit or loss during the period, we need to find the operating revenues, operating expenses, and non-operating income
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Definition: Transportation costs recorded in the income statement are the costs related to the entity’s transportation of goods to customers or suppliers. These costs include the cost of transporting goods from warehouses to customers by a delivery man, trucks, ships, and freighting costs. There are two main differences in transportation costs, where one of those
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Overview: Depreciation and amortization expenses are the expenses records in the income statement over the period due to charging on the uses of tangible and intangible non-current assets based on the depreciation method under the company accounting policies. The depreciation methods of the tangible and intangible assets are really depending on the types of assets,
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Overview: Other income records in the income statement normally refer to the types of incomes that are not related to or generated from the main operation of an entity. Those incomes included a gain on disposal of assets, gain on revaluation of assets, interest incomes from sales on credit which is overdue, interest from the
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Definition: Interest expenses that are recorded in the income statement referred to costs charged to the entity by the bank, creditor and other lenders as the result of fund borrowing for periods of time. Those borrowing included bonds, loan, convertible debt, and credit charged. Interest expenses are partially tax-deductible and the amount charged is based
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