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1220E (20)
Chapter 1

Business Administration 1220E Chapter Notes - Chapter 1: Income Statement, Gross Income, European Cooperation In Science And Technology

Business Administration
Course Code
Business Administration 1220E
Barbara Bruce

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Income statement (statement of earnings): shows how profitable a company was during a
particular period of time (shows the activities over an entire operating cycle, so preferred for
investors, normally a year)
Basically, an income statement is a record of the revenue and expenses of a company during a
specific time period. It is used to determine how profitable a company is during an operational
cycle, and can be used to determine the effectiveness of manager techniques using the income
operations section. This statement always begins with the company’s name, then the income
statement title, then the time period (For the years ending….). It always starts with the revenue,
then expenses, then net income/loss. The main categories to know are the gross income, which
is the margin the company earns after the cost of goods sold are subtracted from the net sales.
Then there’s the income from operations. This is calculated by subtracting the total operating
expenses from the gross income. This is used to determine the efficiency of a company’s
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