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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).
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.
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.