Income Statement

Total Other Income and Expenses Net

A company's total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses.

Net Income from Continuing Operations

Continuing operations is a business term used to describe the segments of a company's business that it considers to be normal, and expects to operate in for the foreseeable future. We most often see continuing operations referenced in earnings reports as a subset of net earnings, as a way to show investors how the company is performing across its core business lines.

Cost of Goods Sold

Cost of Goods Sold is usually the largest expense on the income statement of a company selling products or goods. This account or this calculation (depends on inventory system) matches the cost of the goods sold with the sales (revenue) of the goods that have been sold.

Discontinued Operations

Operations of an entire division, subsidiary, or segment of a company where a formal plan exists to eliminate it from the company.

Research and Development Expense

R & D costs. These are costs incurred to develop new products or processes that may or may not result in commercially viable items. The general rule is that research and development costs are to be expenses immediately when the costs are incurred.

Minority Interest

The portion of a subsidiary corporation's stock that is not owned by the parent corporation.

Total Revenue

The total receipts of a firm from the sale of some given quantities of a product.

Net Income

n business, net income (net earnings, net profit, and informally, bottom line) is an entity's income minus cost of goods sold, expenses and taxes for an accounting period.

Other Operating Expenses

A category of expenditure that a business incurs as a result of performing its normal business operations. One of the typical responsibilities that management must contend with is determining how low operating expenses can be reduced without significantly affecting the firm's ability to compete with its competitors.

Non Recurring Expenses

An entry that appears on a company's financial statements for a one-time expense that is unlikely to happen again. A nonrecurring charge is a one-time charge for an unpredictable event.

Gross Profit

Net sales revenues minus the cost of goods sold.

Effect of Accounting Changes

A change in accounting principles, accounting estimates, or the reporting entity. A change in an accounting principle is a change in a method used, such as using a different depreciation method or switching from LIFO to FIFO. An example of an accounting estimate change could be the recalculation of machine's estimated life due to wear and tear. The reporting entity could change due to a merger or a break up of a company.

Equity Earnings or Loss Unconsolidated Subsidiary

A company that is owned by a parent company, but whose individual financial statements are not included in the consolidated or combined financial statements of the parent company to which it belongs. Instead, this type of company appears in the combined financial statement as an investment.

Operating Income

A company's profit before non operating or other items. Other or non operating items include interest income, interest expense, and gains and losses on sale of assets used in the business, loss on lawsuit, etc.

Earnings Before Interest and Taxes

A company's total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses.

Selling, General, and Administrative Expenses

Also referred to as SG&A. For a manufacturer these are expenses outside of the manufacturing function.These expenses are not considered to be product costs and are not allocated to items in inventory or to cost of goods sold. Instead these expenses are reported on the income statement of the period in which they occur. These expenses are sometimes referred to as operating expenses.

Nonrecurring Events

An entry that appears on a company's financial statements for a one-time expense that is unlikely to happen again. A nonrecurring charge is a one-time charge for an unpredictable event.

Income Before Taxes

An indicator of a company's financial performance calculated as revenue minus expenses, excluding tax. EBT is a line on the company's income statement that shows how much the company has earned after the cost of goods sold, interest and selling, general and administrative expenses have been subtracted from gross sales.

Extraordinary Items

Gains or losses included in a company's financial statements, which are infrequent and unusual in nature. These are usually explained further in the "notes to the financial statements."

Operating Expense

Operating expenses consist of selling and administrative expenses. Operating expenses are deducted from gross profit to arrive at income from operations.

Income Tax Expense

The amount of income tax that is associated with (matches) the net income reported on the company's income statement. This amount will likely be different than the income taxes actually payable, since some of the revenues and expenses reported on the tax return will be different from the amounts on the income statement. For example, a corporation is likely to use straight-line depreciation on its income statement, but will use accelerated depreciation on its income tax return.

Interest Expense

This account is a non-operating or "other" expense for the cost of borrowed money or other credit. The amount of interest expense appearing on the income statement is the cost of the money that was used during the time interval shown in the heading of the income statement, not the amount of interest paid during that period of time.