Accounting Income Statement - What is it?

Try, try, try, and keep on trying is the rule that must be followed to become an expert in anything. – W. Clement Stone

The income statement reports a corporation's net income for the period of time indicated in its heading. The income statement is also known as the statement of income, statement of earnings, statement of operations, profit and loss statement, or P&L.

The historical cost principle means that most of the amounts shown on the income statement reflect a corporation's vast number of actual transactions that were recorded by the accounting system. In addition the income statement will include some adjusting entry amounts entered by the accountant in order to comply with the accrual method of accounting.

Revenues
Revenues are the amounts earned by a corporation through its main activities such as:

• Selling products. These are reported as net sales, net product revenue, revenues from net sales, revenues, etc.
• Providing services. These are likely reported as net service revenues or revenues.

Under the accrual method of accounting, revenues are reported on the income statement in the accounting period in which they are earned (and there is a reasonable assurance that the amounts will be collected). The revenues (and the related assets) are likely captured at the time that the sales invoice is prepared. At the end of the accounting period, accountants will also prepare adjusting entries for revenues that were earned but were not yet fully processed through the accounting system.

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