What are the differences among accounting revenue, gain, and net income?

2. Example of revenue, income, gross profit, profit, net income, and gain

Let us take a look at an example of a multiple-step income statement with cross-references to the terms we have discussed. Note that in the income statement that we refer to income is a secondary type of revenue.

Company ABC
Income Statement
For the Year Ended December 31, 20X1

Sales Revenue

$  1,000,000

This line is sales revenue (or just revenue).

Cost of Goods Sold

600,000

 

Gross Profit

400,000

This line is gross profit (difference between revenue and cost of goods sold).

     

Operating Expenses:

   

Selling Expenses

160,000

 

Administrative Expenses

140,000

 

Income from Operations

100,000

 
     

Interest Income

20,000

This is an example of income.

Rental Income

7,000

This is another example of income.

Gain on Sale of Fixed Assets

3,000

This is an example of gain.

     

Income before Income Tax

130,000

 

Income Tax

50,700

 
     

Net Income

79,300

This is net income (profit, “bottom line”).

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