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Multi-step Income Statement definitions Flashcards

Multi-step Income Statement definitions
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  • Multi-step Income Statement
    Financial report format presenting revenues, expenses, and several key subtotals in a structured sequence to highlight core and non-core business results.
  • Gross Profit
    Subtotal showing the difference between net sales and cost of goods sold, reflecting profitability from core business activities.
  • Net Sales
    Total sales revenue after deducting sales returns, allowances, and discounts, representing actual revenue earned from customers.
  • Cost of Goods Sold
    Direct costs attributable to the production or purchase of goods sold by a business, subtracted from sales to determine gross profit.
  • Operating Expenses
    Necessary costs for running daily business operations, including payroll, rent, utilities, advertising, depreciation, and insurance.
  • Income from Operations
    Subtotal representing profit after deducting operating expenses from gross profit, indicating earnings from main business activities.
  • Non-operating Activities
    Revenues, expenses, gains, or losses not related to core business operations, such as interest, dividends, or asset sales.
  • Interest Revenue
    Income earned from lending money or holding interest-bearing assets, not part of the main business function.
  • Dividend Revenue
    Earnings received from holding shares in other companies, considered outside the primary business operations.
  • Gain
    Positive difference between the sale price and book value of an asset, arising from non-routine transactions.
  • Loss
    Negative difference when an asset is sold for less than its book value, or from unusual business events.
  • Interest Expense
    Cost incurred from borrowing funds, classified as a non-operating expense on the income statement.
  • Income before Income Taxes
    Subtotal showing profit after all operating and non-operating items, but before deducting income tax expense.
  • Income Tax Expense
    Final expense on the income statement, representing taxes owed on pre-tax income.
  • Net Income
    Bottom-line result after all revenues, expenses, and taxes, indicating the overall profitability for the period.