Question

What is the income statement, HOW does it show its data?

2.) How then does the information from the income statement get shown, be represented within the balance sheet?

3.) How do incomer statement items affect balance sheet items, can you give examples thereof?

Answer 1

The income statement records the trading of a business over a specified period. Generally this period is one year. The income statement is also known as a profit and loss statement.

Like any other Ledger the income statement has two sides of debit and credit. All the revenue earned by the company are recorded on the credit side. This would include amount from by sale proceeds, interest earned on investments, etc. All the expenses of the company are recorded on the debit side. This would include cost of manufacturing the products, salaries given to the employees, all other General, administrative and operating expenses, etc.