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Financial Terms | |
Income statement |
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Definition of Income statementIncome statementA financial report that summarizes a company’s revenue, cost of INCOME STATEMENTAn accounting statement that summarizes information about a company in the following format: income statementFinancial statement that shows the revenues, expenses, and net income of a firm over a period of time. income statementFinancial statement that summarizes sales revenue Income StatementOne of the basic financial statements; it lists the revenue and expense accounts of the company.
Related Terms:common-size income statementincome statement that presents items as a percentage of revenues. Income statement (statement of operations)A statement showing the revenues, expenses, and income (the Income StatementsA financial statement that displays a breakdown of total sales and total expenses. ![]() Accounting earningsEarnings of a firm as reported on its income statement. Annual reportYearly record of a publicly held company's financial condition. It includes a description of the balance sheetA term often used instead of the more formal and correct Book IncomePretax income reported on the income statement. CapitalizeIn Finance: to find the present value of a stream of cash flows. Capitalized interestInterest that is not immediately expensed, but rather is considered as an asset and is then Commodities Exchange Center (CEC)The location of five New York futures exchanges: Commodity Cumulative-Effect AdjustmentThe cumulative, after-tax, prior-year effect of a change in accounting extraordinary gains and lossesNo pun intended, but these types of gains Extraordinary itemA transaction that rarely occurs, and which is unusual, such as financial reports and statementsFinancial means having to do with Flow-through basisAn account for the investment credit to show all income statement benefits of the credit Free cash flowsCash not required for operations or for reinvestment. Often defined as earnings before gross margin, or gross profitThis first-line measure of profit Income Tax ProvisionThe expense deduction from pretax book income reported on the management controlThis is difficult to define in a few words—indeed, an Matching conceptThe accounting principle that requires the recognition of all costs that are associated with Net incomeThe last line of the income statement; it represents the amount that the company earned during a specified period. NET SALES (revenue)The amount sold after customers’ returns, sales discounts, and other allowances are taken away from Operating IncomeA measure of results produced by the core operations of a firm. It is common Pro forma statementA financial statement showing the forecast or projected operating results and balance product costThis is a key factor in the profit model of a business. Product profitThe general term profit is not precisely defined; it may refer to net profit and loss statement (P&L statement)This is an alternative moniker RETAINED EARNINGSProfits a company plowed back into the business over the years. Last January’s retained earnings, plus the net income or profit that a company made this year (which is calculated on the income statement), minus dividends paid out, equals the retained earnings balance on the balance sheet date. revenue-driven expensesOperating expenses that vary in proportion to Temporary accountsThe accounts found on the income statement and the statement of Retained Earnings; these accounts are reduced to zero at the end of every accounting period. Vertical analysisThe process of dividing each expense item in the income statement of a given year by net VERTICAL ANALYSISA financial analysis technique that relates key amounts on the income statement and balance sheet to a 100 percent or base figure for the present and previous year. Accrued Incomeincome that has been earned but not yet received. For instance, if you have a non-registered Guaranteed Investment Certificate (GIC), Mutual Fund or Segregated Equity Fund, growth accrues annually or semi-annually and is taxable annually even though the gain is only paid at maturity of your investment. Accumulated Other Comprehensive IncomeCumulative gains or losses reported in shareholders' Adjusted Income from ContinuingOperations Reported income from continuing operations CASH-FLOW STATEMENTA statement that shows where a company’s cash came from and where it went for a period of time, such as a year. Cash Flow statementA financial report that shows the movement in cash for a business during an accounting period. Cash Flow–to–Income Ratio (CFI)Adjusted cash flow provided by continuing operations Convention statementAn annual statement filed by a life insurance company in each state where it does Current Income Tax ExpenseThat portion of the total income tax provision that is based on Deferred Income Tax ExpenseThat portion of the total income tax provision that is the result Disposable Incomeincome less income tax. Dividend incomeincome that a company receives in the form of dividends on stock in other companies that it holds. earned incomeEarned income is generally an individual's salary or wages from employment. It also includes some taxable benefits. Earned income also includes business income if the individual is self-employed. Earned income is used as the basis for calculating RRSP maximum contribution limits. earnings before interest and income tax (EBIT)A measure of profit that Economic incomeCash flow plus change in present value. Employee Retirement Income Security Act of 1974 (ERISA)A federal Act that sets minimum operational and funding standards for employee benefit External Financial StatementsCorporate financial statements that have been reported on by an external independent accountant. Financial reports or statementsThe Profit and Loss account, Balance Sheet and Cash Flow statement of a business. Fixed-income equivalentAlso called a busted convertible, a convertible security that is trading like a straight Fixed-income instrumentsAssets that pay a fixed-dollar amount, such as bonds and preferred stock. Fixed-income marketThe market for trading bonds and preferred stock. Fixed-income securityA security that pays a specified cash flow over a IncomeNet earnings after all expenses for an accounting period are subtracted from all Income beneficiaryOne who receives income from a trust. Income bondA bond on which the payment of interest is contingent on sufficient earnings. These bonds are Income from Continuing OperationsAfter-tax net income before discontinued operations, Income fundA mutual fund providing for liberal current income from investments. income fundsMutual funds that seek regular income. This type of fund invests primarily in government, corporate and other types of bonds, debt securities, and other income producing securities and in certain circumstances can also hold common and preferred shares. Income SmoothingA form of earnings management designed to remove peaks and valleys Income SplittingThis is a tax planning strategy of arranging for income to be transferred to family members who are in lower tax brackets than the one earning the income, thus reducing taxes. Even though attribution rules limit income splitting, there are still a number of legitimate ways to do so, such as through the use of spousal RRSPs. Income stockCommon stock with a high dividend yield and few profitable investment opportunities. INCOME TAXWhat the business paid to the IRS. Income taxA government tax on the income earned by an individual or corporation. Income Tax ExpenseSee income tax provision. Incomes PolicyA policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example. Interest incomeincome that a company receives in the form of interest, usually as the result of keeping money in interest-bearing accounts at financial institutions and the lending of money to other companies. Investment incomeThe revenue from a portfolio of invested assets. Life Income FundCommonly known as a LIF, this is one of the options available to locked in Registered Pension Plan (RPP) holders for income payout as opposed to Registered Retirement Savings Plan (RRSP) holders choice of payout through Registered Retirement income Funds (RRIF). A LIF must be converted to a unisex annuity by the time the holder reaches age 80. mission statementa written expression of organizational purpose that describes how the organization uniquely meets its targeted customers’ needs with its products or services Monthly income preferred security (MIP)Preferred stock issued by a subsidiary located in a tax haven. National IncomeGDP with some adjustments to remove items that do not make it into anyone's hands as income, such as indirect taxes and depreciation. Loosely speaking, it is interpreted as being equal to GDP. National Income and Product AccountsThe national accounting system that records economic activity such as GDP and related measures. Net incomeThe company's total earnings, reflecting revenues adjusted for costs of doing business, NET INCOMEThe profit a company makes after cost of goods sold, expenses, and taxes are subtracted from net sales. Net incomeThe excess of revenues over expenses, including the impact of income taxes. net income (also called the bottom line, earnings, net earnings, and netoperating earnings) Notes to the financial statementsA detailed set of notes immediately following the financial statements in Official statementA statement published by an issuer of a new municipal security describing itself and the issue Operating incomeThe net income of a business, less the impact of any financial activity, Permanent Income HypothesisTheory that individuals base current consumption spending on their perceived long-run average income rather than their current income. Pro forma financial statementsFinancial statements as adjusted to reflect a projected or planned transaction. RATIO OF NET INCOME TO NET SALESA ratio that shows how much net income (profit) a company made on each dollar of net sales. Here’s the formula: RATIO OF NET SALES TO NET INCOMEA ratio that shows how much a company had to collect in net sales to make a dollar of profit. Figure it this way: Real Incomeincome expressed in base-year dollars, calculated by dividing nominal income by a price index. Registered Retirement Income Fund (Canada)Commonly referred to as a RRIF, this is one of the options available to RRSP holders to convert their tax sheltered savings into taxable income. Registration statementA legal document that is filed with the SEC to register securities for public offering. ReinstatementThis is the restoration of a lapsed life insurance policy. The life insurance company will require evidence of continuing good health and the payment of all past due premiums plus interest. residual incomethe profit earned by a responsibility center that exceeds an amount "charged" for funds committed to that center residual incomeAlso called economic value added. Profit minus cost of capital employed. Residual income (RI)The profit remaining after deducting from profit a notional cost of capital on the investment in a business or division of a business. Restatement of Prior-Year Financial StatementsA recasting of prior-year financial statements to remove the effects of an error or other adjustment and report them on a new basis. Spread incomeAlso called margin income, the difference between income and cost. For a depository Statement billingBilling method in which the sales for a period such as a month (for which a customer also Statement of cash flowsA financial statement showing a firm's cash receipts and cash payments during a Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |