Sales or
service revenues
− Cost of goods sold (COGS)
= Gross profit
− Selling, general, and administrative
expenses
= Operating income
+ Interest and dividend income
− Interest expense
+/−
Non-operating gains/(losses)
= Income from continuing operations before
income tax
− Provision for income taxes on continuing
operations
= Income from continuing operations
+/−
Gains/(losses) on operations of discontinued component (net of applicable
taxes)
+/−
Gains/(losses) on disposal of discontinued component (net of applicable taxes)
Income before extraordinary item
+/−
Extraordinary gain/(loss)
Less: Applicable income tax
= Net Income
What is the difference between revenue, income, and gain?
Definition of Revenue
Revenue is the amount earned from a company's main operating activities, such as a retailer selling merchandise or a law firm providing legal services.
Definition of Gain
In accounting, a gain is the result of a peripheral activity, such as a retailer selling one of its old delivery trucks. A gain occurs when the cash amount (or its equivalent) received is greater than the asset's carrying amount, which is also referred to as the asset's book value. For example, if the company receives $3,000 for the old delivery truck, and the truck's carry amount (book value) at the time of the sale was $600, the company will have a gain of $2,400.
Definition of Income
Non-accountants might use the term income instead of the word revenue. Generally, accountants use the term income to mean "net of revenues and expenses." For example, a retailer's income from operations is its net sales minus the cost of goods sold minus its selling, general and administrative expenses.
Definition of Carrying Amount
The term carrying amount is also known as book value or carrying value. The term carrying amount is often used when there is a valuation account associated with another general ledger account.
Ex:
- A company has a truck that has its cost of $50,000 in its account entitled Truck. The associated account Accumulated Depreciation has a credit balance of $43,000. The truck's carry amount or book value is $7,000.
Không có nhận xét nào:
Đăng nhận xét