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Financial Statement Reporting: The Income Statement

Jae K. Shim, Joel G. Siegel, Allison I. Shim

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Abstract

This chapter highlights the point that in preparing the income statement, revenue and expenses must be properly recognized. The income statement must be presented in the proper format with earnings per share (EPS) disclosed. Accounting Standards Codification (ASC) No. 220-10-45-3, Comprehensive Income: Overall (Financial Accounting Standards [FAS] No. 130, Reporting Comprehensive Income), mandates that companies report comprehensive income and its components. Comprehensive income consists of two components: net income and “other comprehensive income.” In the income statement, the “other comprehensive income” reported is for the present year only. In the balance sheet, under the stockholders' equity section, the “accumulated (cumulative) other comprehensive income” is reported for all the years. International Financial Reporting Standards (IFRS) do not permit special reporting for extraordinary items.

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What this paper is about

This chapter highlights the point that in preparing the income statement, revenue and expenses must be properly recognized. The income statement must be presented in the proper format with earnings per share (EPS) disclosed. Accounting Standards Codification (ASC) No. 220-10-45-3, Comprehensive Income: Overall (Financial Accounting Standards [FAS] No. 130, Reporting Comprehensive Income), mandates that companies report comprehensive income and its components. Comprehensive income consists of two components: net income and “other comprehensive income.” In the income statement, the “other comprehensive income” reported is for the present year only. In the balance sheet, under the stockholders' equity section, the “accumulated (cumulative) other comprehensive income” is reported for all the years. International Financial Reporting Standards (IFRS) do not permit special reporting for extraordinary items.

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Available abstract

This chapter highlights the point that in preparing the income statement, revenue and expenses must be properly recognized. The income statement must be presented in the proper format with earnings per share (EPS) disclosed. Accounting Standards Codification (ASC) No. 220-10-45-3, Comprehensive Income: Overall (Financial Accounting Standards [FAS] No. 130, Reporting Comprehensive Income), mandates that companies report comprehensive income and its components. Comprehensive income consists of two components: net income and “other comprehensive income.” In the income statement, the “other comprehensive income” reported is for the present year only. In the balance sheet, under the stockholders' equity section, the “accumulated (cumulative) other comprehensive income” is reported for all the years. International Financial Reporting Standards (IFRS) do not permit special reporting for extraordinary items.

Key concepts: Comprehensive income, Income statement, Net income, Statement of changes in financial position, Balance sheet, Accounting, Financial statement analysis, Business

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