From the course: Accounting Foundations: Bookkeeping

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The income statement

The income statement

From the course: Accounting Foundations: Bookkeeping

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The income statement

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- The second primary financial statement is the income statement. That's revenues minus expenses equal net income. We use the term revenues and expenses all the time, so let's make sure that we know what these words mean. In an accounting context, revenue means the amount of assets generated in doing business, and different companies generate assets in different ways. Walmart, for example, generates assets by putting things on shelves that you and I buy. That's how Walmart creates assets. Microsoft creates assets by creating software and hardware that you and I then buy, and we pay Microsoft for those things. Disney has consumer products. They have cruises. They have theme parks. We pay to use those things or to buy those products, and that's how Disney generates assets. Revenue is the amount of assets generated in doing business, and hopefully, the assets generated are less than the assets consumed. Expenses are the amount of assets consumed in doing business. For example, Microsoft…

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