Preparing an Income Statement

Going Concern

Accounting concept applied when financial statements are prepared with the expectation that a business will remain in operation indefinitely

Financial Accounting

Area of accounting that focuses on reporting information to external users

Managerial Accounting

Area of accounting that focuses on reporting information to internal users

Ratio Analysis

Calculation and interpretation of a financial ratio

Financial Ratio

Comparison between two components of financial information

Income Statement with Two Sources of Revenue and a Net Loss

Financial statement that shows two sources of revenue and a net loss

Full Disclosure

Financial statements contain all information necessary to understand a business's financial situation

Analyzing an Income Statement

Process of examining and interpreting the information presented in an income statement

Return on Sales (ROS)

Ratio of net income to total sales

Vertical Analysis

Reporting an amount on a financial statement as a percentage of another item on the same financial statement

Heading of an Income Statement

Section that provides the title of the income statement

Revenue, Expenses, and Net Income Sections of an Income Statement

Sections that display the revenue, expenses, and net income of a business