Income statement

Instead, they produce a similar statement that reflects funding sources compared against program expenses, administrative costs, and other operating commitments.

[3] Revenues and expenses are further categorized in the statement of activities by the donor restrictions on the funds received and expended.

[4] The Single Step income statement totals revenues and subtracts expenses to find the bottom line.

The Multi-Step income statement takes several steps to find the bottom line: starting with the gross profit, then calculating operating expenses.

If applicable to the business, summary values for the following items should be included in the income statement:[5] Expenses recognised in the income statement should be analysed either by nature (raw materials, transport costs, staffing costs, depreciation, employee benefit etc.)

[6] They are reported separately because this way users can better predict future cash flows - irregular items most likely will not recur.

Extraordinary items are both unusual (abnormal) and infrequent, for example, unexpected natural disaster, expropriation, prohibitions under new regulations.

Since this forms the last line of the income statement, it is informally called “bottom line.” It is important to investors as it represents the profit for the year attributable to the shareholders.

On 6 September 2007, the International Accounting Standards Board issued a revised IAS 1: Presentation of Financial Statements, which is effective for annual periods beginning on or after 1 January 2009.

All items of income and expense recognised in a period must be included in profit or loss unless a Standard or an Interpretation requires otherwise.

(IAS 1.88) Some IFRSs require or permit that some components to be excluded from profit or loss and instead to be included in other comprehensive income.