NARRATIVE REPORT

INCOME STATEMENT
Income Statement shows a company’s revenues, expenses, and profitability over a
period of time It is also sometimes called a profit-and-loss (P&L) statement or an
earnings statement.
The Income Statement is a formal financial report that presents the result of
operation for a specific period by showing a comparison of activities that increase and
decrease capital; that is sales and income against cost and expense, which results in
either net income or net loss.
The Income Statement present that nominal accounts: sales and income, cost, and
expense; and their balances represent the amounts accumulated over a specific period
and the resulting net income and net loss for the period.
PARTS OF THE INCOME STATEMENT
The Income Statement has two main parts: the heading and the body.
Heading
The heading of the Income Statement contains three lines as follows:
First line: Name of the Company
Second line: the title: Income Statement
Third line: the Date, which is the end of the period: month or year, covered by the
statement.
Body
The parts of the body of the Income Statement depend upon the type of businesses
that the company operates. In a service company, the body of the Income Statement
contains a simple listing of all the income and expenses items and a comparison of their
total, to determine net income or net loss.
On the other hand, merchandising and manufacturing companies include a computation
of the cost of good that were manufactured and/or sold during the period.