Application of Income Statement


Warning: Use of undefined constant no - assumed 'no' (this will throw an Error in a future version of PHP) in /home/austra01/public_html/allacademicanswers.com/wp-content/plugins/content-for-money/contentformoney.php on line 162

Application of Income Statement. An income statement is a financial statement summarizing all revenues and expenditures of a business enterprise, or an individual. Precisely, an income statement shows how revenues generated are sequentially transformed into net income. This is done by taking all expenses incurred from the gross revenues acquired from a particular project.

The application of income statement in our day-to-day activities enables an individual or an organization to track down all its expenditures and revenues for evaluation of the overall progress in terms of financial performance. For an individual, income statement facilitates the gauging of incoming finances and outgoing expenses with respect to the laid down budget (Helfert, 2001).

Pay to Unlock the Answer!



Through having lower expenses than my gross income, I will be able to save more for futures emergency expenses. By having a well organized personal statement, I have leant that I will be able to identify areas where I need to control my budget (Williams, Haka and Bettner, 2008). On this basis, the knowledge I have gained by understanding income statement can be attributed to my personal and professional growth to a great extent.

In conclusion, it has been observed on how income statement to an individual or an organization is a very critical financial statement. This is because; it portrays personal or organizational financial position which is fundamental in achieving the set goals and objectives. Particularly, income statement has been considered as a control tool for future prospects by looking on previous trends of an organizational or personal financial performance.   

References

Barry J. and Jermakowicz, E. (2007). Interpretation and application of international financial        reporting standards. New York: Prentice Hall.

Harry I., Dodd, J. and Tearney, M. (2004). Accounting theory: Conceptual issues in a political      and economic environment. New Jersey: McGraw-Hill Publishers.

Helfert, E. (2001).  Financial analysis tools and techniques – A guide for managers. New York:     McGraw-Hill.

Williams, J., Haka, S. and Bettner, M. (2008).  Financial & managerial accounting. London:        Routledge Publishers.