Income Statement

The financial statement that shows whether the business earned a profit by subtracting expenses from revenues; it lists the types and amounts of revenues earned and expenses incurred by a business over a period of time.

Income Statement of a Merchandising Company

• a major cost to merchandising businesses is the cost of the goods it buys to resell (cost of goods sold).

• this is an expense that is shown separately on the income statement.

Two Key Formulas

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