Income Statements and Accounting

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Income statements are a very substantial and important part of businesses and accounting.  An income statement summarizes the gains and financial losses of a business which can calculate whether the company gained a profit or had a loss.  In addition, income statements have revenues and expenses.  Revenues and expenses in income statements determine whether the allocation of goods can produce profits.  Also, income statements show gains and losses of a company.  Gains and losses can be generalized as the net loss or gain of money of a company from a long-term perspective.   Although income statements show financial profits and losses, they do not show cash receipts or disbursements.  In general, income statements are an informative and necessary practice used by accountants.

Two very important parts of income statements are gains and revenues.  A gain is the sale of certain long-term assets and financial lawsuits.  A gain occurs when earnings from a long-term asset outweigh the value by which the business had the long-term asset priced.  In addition, a gain can also occur on a financial lawsuit in which a company wins a net positive amount of money.  The next important part of income statements is revenues.   Revenues come from the result of purchasing and selling certain goods or purchasing and manufacturing new goods.  Revenues happen when money is earned due to a profit in the process of purchasing and selling or manufacturing and selling a good.  Overall, gains and revenues are essential parts of an income statement.  

The next two important parts of income statements are losses and expenses.   A loss is essentially the opposite of a gain.  A loss can happen on the sale of long-term assets by which the earnings of the long-term asset do not outweigh the book price of it.  Also, losses can happen in financial lawsuits in which a company has a net loss of money.  An expense is a financial burden by which a company must use money for goods or services so that they may make revenues back.  Common examples of expenses would be employee wages, electric and water costs, or fossil fuels.  In general, losses and expenses are two concepts that can have negative effects on a business.

            I learned this information through the website accountingcoach.com.  The website was setup very well and had lots of great details about income statements.  The website was structured in a business casual style which helped create a more formal tone on the website.  Also, the great details and analysis of income statements and other accounting principles helped me learn the concept of income statements better. Overall, I learned about income statements through this website which is a very good source for accounting materials.

            Income statements are a focal point of the practice of accounting, but they are used by many other fields in business.  Income statements are summaries of a business’s financial transactions.  Income statements compile all transactions ranging from financial gains to losses.  In addition, income statements summarize the revenues and expenses of business.  Overall, income statements are an important part of accounting, and they are necessary for businesses to function properly.

Thank you,

Austin Bechtel

Bibliography

Averkamp, Harold.  AccountingCoach.  2017,

https://www.accountingcoach.com/income-statement/explanation.  Accessed 07 October 2017.