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 |
||
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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