Q2_LAS1_W1

• INCOME
STATEMENT |
• Income and CostS
Learning Objectives
At the end of the lesson, you should be able to:
1. Identify the types of income;
2. Differentiate revenue from income; and
3. Appreciate the value of preparing the income
statement.
ACTIVITY
Complete the
statement
Vintage Cafe
REVENUE
vs.
INCOME
vs.
profit
 revenue

- It is the sales amount a company earns from providing

services or selling products.
- It does not necessarily mean cash received.
- It is the very first line in the income statement.
- It is the money the company makes from a transaction
that does not account for costs or overhead expenses.
 revenue

Types of revenue:
1.The sale of goods, products or merchandise;
2.The sale of services;
3.Rental income from commercial property;
4.The sale of tickets to a concert;
5.Interest income from lending.
 revenue

Revenue = Product/Service Quantity x

Sale Price
 INCOME
- It can sometimes be used to mean revenue.
- It is the amount of money a company makes minus the
cost of running a business.
- For businesses, it is the revenue from selling services,
products and any interest and dividends received with
respect to their cash accounts and reserves.
 INCOME

Types of income:
1.Ordinary Income;
2.Capital Gains;
3.Tax-Exempt Income
 INCOME

Income = Revenue – Cost of Goods

 profit

- It is the amount of money a business receives after it

accounts the cost of goods.
- If the value is a positive amount, businesses gain a
profit, instead, it is a loss.
- Many investors or decision-makers use the total profit to
determine a company’s success.
 PROFIT

Profit = Revenue – Cost of Goods –

Variable Costs and Operating Costs –
Taxes
 COST

- The cost of the product or service is done on estimate

approach.
- It is vital to list down and determine the costing to make
a product or to deliver a service.
- It is classified to direct cost and indirect cost.
 COST
Direct Cost – are expenses you can directly link to a
specific project, item, service or expense category. It
includes material cost, labor costs, and equipment costs.
Indirect Cost – are expenses you can’t directly link to a
specific product or service. These include rent, utilities,
and administrative expenses.
 COST

Benefits of knowing your cost:

1.You can draft your estimates without worries
2.You can anticipate for estimated profits.
3.You can identify the expensive and cheap materials
you need.
4.You can have a chance to do the cost- cutting.
SHORT QUIZ #1