The income statement is the report that gives details about the profits or the losses made by the business during the reporting period (usually a year). It reports the revenues and the expenses of the business during the year. This is one of the most important statements for an analyst as it gives the status of the profitability of the business.
The following points need to be noted about income statements:
a. Income statements are often also known as ‘statement of operations’, ‘statement of earnings’, ‘profit and loss statement’ etc.
b. Under IFRS, Income Statement can be reported as:
i. Section of single statement of comprehensive statement; or
ii. Alternatively, as a separate statement followed by a statement of comprehensive income.
c. Under U.S. GAAP:
i. Both the treatments suggested by IFRSs are accepted; or
ii. Alternatively, a separate statement with the components of other comprehensive income in the Statement of Changes in Equity.
d. Both, IFRS and U.S. GAAP require a comparative statement of three years to be presented.