1. Income Statement summarizes the effects of business activity for an accounting period whether the profit or loss is earned for that period.
2. Income statements have two main components:
(a) results
(b) spending
3. Nett profit is earned if revenue exceeds expenses while net loss occurs when expenditure exceeds revenue.
Revenue > Spending → Net Profit
Revenue < Expenses → Net Loss
The Income Statement has the following information:
(a) the name of the business
(b) the title of the statement
(c) the accounting period for the relevant statement
4. The Income Statement has the following information:
(a) the name of the business
(b) the title of the statement
(c) the accounting period for the relevant statement
Example:
The following is the information provided by Khalid who manages the A1 Satay Stall.
| Total amount of sales for August 1998 | RM2400 |
| Material cost used (meat, cucumber, onion, etc.) | 650 |
| Other expenses in August: | |
| Fuel | 160 |
| Stall rent | 250 |
| Business licenses | 25 |
| Wrapping expenses | 35 |
| Assistant wages | 420 |
| General expenses | 110 |
| Interest on loans expenses | 80 |
