The Purpose and Definition of Comprehensive Income
What are the 3 elements of a statement of comprehensive income for a service business?
The three elements of a statement of comprehensive income for a service business are:
1) Revenue: This includes all income earned from providing services to customers, including any sales taxes or other fees collected.
2) Expenses: This includes all costs incurred in providing those services, including payroll, rent, utilities, and other operating expenses.
3) Profit (or loss): This is the bottom line figure, calculated as revenue minus expenses. If revenue is greater than expenses, the business has made a profit; if expenses are greater than revenue, the business has suffered a loss.
What are the 3 main parts of an income statement?
The three main parts of an income statement are revenue, expenses, and profit. Revenue is the total amount of money that a company brings in from sales. Expenses are the costs that a company incurs in order to generate revenue. Profit is the difference between revenue and expenses.
What does the statement of comprehensive income indicate vs the statement of financial position?
The statement of comprehensive income is a financial statement that summarizes a company's revenues, expenses, and profits/losses over a period of time. The statement of financial position, on the other hand, is a snapshot of a company's assets, liabilities, and equity at a single point in time.
The statement of comprehensive income can be used to measure a company's financial performance over time, while the statement of financial position can be used to assess a company's overall financial health.
What does the income statement reveals?
An income statement, also called a profit and loss statement, is a financial statement that summarizes a company's revenues, expenses, and profits/losses over a specific period of time. The income statement can be used to assess a company's financial performance, as well as to compare it against other companies in the same industry.
The income statement begins with a company's total revenue, which is then offset by its total expenses. The resulting figure is the company's net income, which can either be positive (if revenue exceeds expenses) or negative (if expenses exceed revenue).
The income statement can provide insights into a company's overall profitability, as well as its ability to generate revenue and control expenses. It can also be used to assess a company's financial health, as well as to compare it against its competitors.
What is other comprehensive income examples?
Other comprehensive income (OCI) is a term used in accounting to refer to items of income and expense (including reclassification adjustments) that are not included in net income, but are reported in the comprehensive income statement.
Some examples of items that would be included in OCI are:
- Unrealized gains and losses on investments that are classified as "available-for-sale"
- Gains and losses on derivative instruments that are designated as hedging instruments in a "cash flow hedge"
- Translation gains and losses from foreign operations
- Reclassification adjustments for items that are reclassified out of OCI and into net income in future periods