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    Lecture 11 Income

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    Сильвия Габриэль
    The document provides an overview of key elements of an income statement including revenue, costs of goods sold, gross profit, expenses, EBITDA, depreciation, operating income, interest, taxes, and net income. It explains how each line item is calculated and defines important acronyms. An example income statement is also included showing a company with four revenue streams, various expenses, and ending with a net profit.

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    Lecture 11 Income

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    Сильвия Габриэль
    11 views14 pages
    The document provides an overview of key elements of an income statement including revenue, costs of goods sold, gross profit, expenses, EBITDA, depreciation, operating income, interest, taxes, and net income. It explains how each line item is calculated and defines important acronyms. An example income statement is also included showing a company with four revenue streams, various expenses, and ending with a net profit.

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    The document provides an overview of key elements of an income statement including revenue, costs of goods sold, gross profit, expenses, EBITDA, depreciation, operating income, interest, taxes, and net income. It explains how each line item is calculated and defines important acronyms. An example income statement is also included showing a company with four revenue streams, various expenses, and ending with a net profit.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    11 views14 pages

    Lecture 11 Income

    Uploaded by

    Сильвия Габриэль
    The document provides an overview of key elements of an income statement including revenue, costs of goods sold, gross profit, expenses, EBITDA, depreciation, operating income, interest, taxes, and net income. It explains how each line item is calculated and defines important acronyms. An example income statement is also included showing a company with four revenue streams, various expenses, and ending with a net profit.

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    Introduction to Accounting for

    Tourism & Hospitality


    Shynassyl Yernazar
    Statement of Comprehensive Income

    The Income Statement is one of a company’s core financial statements that shows their
    profit and loss over a period of time. The profit or loss is determined by taking all revenues
    and subtracting all expenses from both operating and non-operating activities.
    Revenue/Sales
    Sales Revenue is the company’s revenue from sales or services, displayed at the very top of
    the statement. This value will be the gross of the costs associated with creating the goods
    sold or in providing services. Some companies have multiple revenue streams that add to a
    total revenue line.

    Cost of Goods Sold (COGS)


    Cost of Goods Sold (COGS) is a line-item that aggregates the direct costs associated with
    selling products to generate revenue. This line item can also be called Cost of Sales if the
    company is a service business. Direct costs can include labor, parts, materials.

    Gross Profit
    Gross Profit Gross profit is calculated by subtracting Cost of Goods Sold (or Cost of Sales)
    from Sales Revenue.

    .
    General and Administrative (G&A) Expenses
    SG&A Expenses include the selling, general, and administrative section that
    contains all other indirect costs associated with running the business. This
    includes salaries and wages, rent and office expenses, insurance, travel
    expenses, and sometimes depreciation and amortization, along with other
    operational expenses. Entities may, however, elect to separate depreciation and
    amortization in their own section.

    EBITDA
    EBITDA stands for Earnings before Interest, Tax, Depreciation, and Amortization.
    It is calculated by subtracting SG&A expenses

    Depreciation & Amortization Expense


    Depreciation and amortization are non-cash expenses that are created by
    accountants to spread out the cost of capital assets such as Property, Plant, and
    Equipment (PP&E).
    Operating Income (or EBIT)
    Operating Income represents what’s earned from regular business operations. In
    other words, it’s the profit before any non-operating income, non-operating
    expenses, interest, or taxes are subtracted from revenues. EBIT is a term
    commonly used in finance and stands for Earnings Before Interest and Taxes.

    Interest
    Interest Expense. It is common for companies to split out interest expense and
    interest income as a separate line item in the income statement. This is done in
    order to reconcile the difference between EBIT and EBT. Interest expense is
    determined by the debt schedule.
    EBT (Pre-Tax Income)
    EBT stands for Earnings Before Tax, also known as pre-tax income, and is found by
    subtracting interest expense from Operating Income. This is the final subtotal before
    arriving at net income.

    Income Taxes
    Income Taxes refer to the relevant taxes charged on pre-tax income. The total tax
    expense can consist of both current taxes and future taxes.

    Net Income
    Net Income is calculated by deducting income taxes from pre-tax income. This is the
    amount that flows into retained earnings on the balance sheet, after deductions for
    any dividends.
    Income

    Revenue Stream 1 £700,000


    Revenue Stream 2 £700,000
    Revenue Stream 3 £700,000
    Revenue Stream 4 £700,000
    Total Net Revenue £2,000,000

    Cost of Goods Sold £500,000

    GROSS PROFIT £1,500,000

    Expenses
    Marketing Campaigns £200,000
    Salaries £500,000
    Rent £20,000
    Travel £25,000
    Utilities £20,000
    Client Expenses £20,000
    Depreciation & Amortization £300,000
    Total Expenses £1,085,000

    Earnings Before Interest & Taxes £415,000

    Interest Expense £25,000


    Income Taxes £20,000

    NET PROFIT £240,000

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