INCOME STATEMENT

Income statement is preffered to determine the operational position of he concern. It is a statement of revenues earned and the expences incured for earning that revenues. Excess of revenues over ecpenditure is profit and if the expenditure is more than the inocme, there is a loss. The income statement is prepared for a perticaular period., generally a year.

When income statement is prepared for the year ending 31st December 2008, then all revenues and expenditures falling due in the year will be taken into account irrespective of their receipt or payment in the scene outstanding incomes and expences are also included.

The income statement may be prepared in different forms. Manufacturing account is prepared find out the cost of production, in the form of trading account to determine gross profit or gross loss and a profit a profit and loss account to determine net profit and net loass. A statement of reatined earnings may also be prepared to show the distrubution of Profits.