Components of the Income Statement Gross Profit Net sales Cost of goods sold Gross profit Gross profit Net sales Gross profit percentage Chapter 4-16
Chapter 4-16 Net sales – Cost of goods sold = Gross profit Gross profit ÷ Net sales = Gross profit percentage Gross Profit
Components of the Income Statement Operating Expenses Operating expenses may be reported in two parts: 1)Selling expenses 2)General and administrative expenses Chapter 4-17
Chapter 4-17 Operating expenses may be reported in two parts: 1) Selling expenses 2) General and administrative expenses Operating Expenses
Components of the Income Statement Operating Income Operating income measures the performance of the fundamental business operations conducted by a company. Gross profit Operating expenses Operating income Chapter 4-18
Chapter 4-18 Operating income measures the performance of the fundamental business operations conducted by a company. Gross profit – Operating expenses = Operating income Operating Income
Components of the Income Statement Other Revenues and Gains This section usually includes items identified with the peripheral activities of the company. 1)Rent revenue 2)Interest revenue 3)Dividend revenue 4)Gains from the sale of assets Chapter 4-19
Chapter 4-19 This section usually includes items identified with the peripheral activities of the company. 1) Rent revenue 2) Interest revenue 3) Dividend revenue 4) Gains from the sale of assets Other Revenues and Gains
Components of the Income Statement Other Expenses and Losses This section parallels "Other Revenues and Gains"except the items result in deductions from operating income. 1)Interest expense 2)Losses from the sale of assets Chapter 4-20
Chapter 4-20 This section parallels “Other Revenues and Gains” except the items result in deductions from operating income. 1) Interest expense 2) Losses from the sale of assets Other Expenses and Losses