Income Statement Review. Income Statement Basics. Income statement explains changes in retained earnings: RE YE ’02 = RE YE ‘01 + NI In ‘02 - Dividends In ’02 Net Income In ‘02 = Revenue In ‘02 - Expense In ‘02. Retained Earnings is a permanent account
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Income statement explains changes in retained earnings:
REYE ’02= REYE ‘01 + NIIn ‘02 - DividendsIn ’02
Net IncomeIn ‘02 = RevenueIn ‘02 - ExpenseIn ‘02
- Cost of Goods Sold
- Selling, General and Administrative Expense
+/- Interest Expense/Income
+/- Other Income, Gains, Expenses, Losses, etc.
Pre-Tax Income from Continuing Operations
- Income Tax Expense
Net Income from Continuing Operations
+/- Gain/Loss on Business Sold (net of income tax)
Income from Discontinued Operations
+/- Extraordinary Gains/Losses (net of income tax)
+/- Cumulative Effect of Accounting Change