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a statement of comprehensive income

Charitable organizations that are required to publish financial statements do not produce an income statement. Instead, they produce a similar statement that reflects funding sources compared against program expenses, administrative costs, and other operating commitments. This statement is commonly referred to as the statement of activities.[3] Revenues and expenses are further categorized in the statement of activities by the donor restrictions on the funds received and expended.

The income statement can be prepared in one of two methods.[4] The Single Step income statement totals revenues and subtracts expenses to find the bottom line. The Multi-Step income statement takes several steps to find the bottom line: starting with the gross profit, then calculating operating expenses. Then when deducted from the gross profit, yields income from operations.

Adding to income from operations is the difference of other revenues and other expenses. When combined with income from operations, this yields income before taxes. The final step is to deduct taxes, which finally produces the net income for the period measured.

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Usefulness and limitations of income statement[edit]

Income statements may help investors and creditors determine the past financial performance of the enterprise, predict the future performance, and assess the capability of generating future cash flows using the report of income and expenses.

However, information of an income statement has several limitations:

  • Items that might be relevant but cannot be reliably measured are not reported (e.g., brand recognition and loyalty).
  • Some numbers depend on accounting methods used (e.g., using FIFO or LIFO accounting to measure inventory level).
  • Some numbers depend on judgments and estimates (e.g.depreciation expense depends on estimated useful life and salvage value).
                - INCOME STATEMENT GREENHARBOR LLC -
                 For the year ended DECEMBER 31 2010
  
                                               €          €
                                             Debit     Credit
Revenues
GROSS REVENUES (including INTEREST income)             296,397
                                                      --------
Expenses:
  ADVERTISING                                6,300
  BANK & CREDIT CARD FEES                      144
  BOOKKEEPING                                2,350
  SUBCONTRACTORS                            88,000
  ENTERTAINMENT                              5,550
  INSURANCE                                    750
  LEGAL & PROFESSIONAL SERVICES              1,575
  LICENSES                                     632
  PRINTING, POSTAGE & STATIONERY               320
  RENT                                      13,000
  MATERIALS                                 74,400
  TELEPHONE                                  1,000
  UTILITIES                                  1,491
                                                       --------
      TOTAL EXPENSES                                   (195,512)
                                                       --------
NET INCOME                                              100,885