Income Statement
Guiding Principles Revenue is recognized when the activity that generates it is fully or essentially complete. (this is a complicated topic) There must be a level of certainty that payment will be received. Expenses associated with the revenue should be booked to the same time period Expenses are costs that have a short period of economic benefit. (this is a complicated topic too)
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• Revenue (Sales, or Income) • Expenses • Net Income (Profit) (= Revenue – Expense)
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The income statement describes activity over a period of time
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101
THE PRINCIPALS ACADEMY 2022
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