Summarization is the third function of accounting.

IN this function we
prepare summaries of the accounting information, to be used by
different stake holders.
In financial accounting our users of the information are external
stakeholders. These users are provided information in the form of
financial statements.
The first statement that we prepare is called the income statement. It is
also called the statement of financial performance. It is prepare usually
from the income summary ledger, which is prepared after closing
entries, however, in absence of the income summary ledger, we may
prepare it from the adjusted Trial balance. Please remember that the
Income statement is a statement and not an account, this means it will
not have any Dr or Cr side.
Company name
Income statement
For the accounting period ended on June 30, 2005
Teaching Services Revenues
950,000
Operating Expenses (All expenses except Interest Exp and Taxes)
Salaries Exp 50,000
Rent Exp 25000
Insurance Exp 15000
Stationery Exp 5000
Supplies Exp 15000
Total Operating Exp
(110,000)
EBIT (Earnings before Interest and Taxes)/operating profit/operating
income 840,000
Interest Expenses
(140,000)
EBT (Earnings Before Taxes)
700,000
Corporate Taxes (40%, of EBT)
(280,000)
EAT (Earnings After Taxes)/Net income /Net profit
420,000