Course 301: The Income Statement
In this course
1 Introduction
2 Revenue
3 Expenses
4 Important Income Statement Calculations
5 Accrual Accounting
6 The Bottom Line

While income statements for companies in different industries may not look exactly the same, almost all of them begin with the company's revenue for the period. Revenue, which is sometimes called "sales," represents the amount of money a company brings in for selling its goods or services. (Because banks and some other financial institutions make money from interest--i.e., they don't really "sell" anything--their income statements look different.)

Depending on the nature of a company's revenue stream, a company will record revenue in one of several ways. When you buy a DVD from Best Buy BBY, for example, Best Buy recognizes revenue when you give the company your money or your credit card and walk out with your purchase. As another example, an insurance company will "recognize," or earn and record, revenue from premiums that you pay gradually over the period in which you are covered. Be sure to check out a company's "revenue recognition policy," which can be found in the notes accompanying its financial statements, to see how it accounts for its revenue.

Next: Expenses >>

Print Lesson |Feedback | Digg! digg it
Learn how to invest like a pro with Morningstar’s Investment Workbooks (John Wiley & Sons, 2004, 2005), available at online bookstores.
Copyright 2015 Morningstar, Inc. All rights reserved. Please read our Privacy Policy.
If you have questions or comments please contact Morningstar.