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Measuring Financial Performance. The Income Statement (also known as the Profit & Loss (or P&L) Statement). Income Statement Layout (UK). Note: No tax Non-operating income Depreciation expense explicit. The Income Statement – Standard Format.

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Measuring Financial Performance

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income statement layout uk
Income Statement Layout (UK)
  • Note:
  • No tax
  • Non-operating income
  • Depreciation expense explicit

The Income Statement – Standard Format

* Operating profit not separated out; Depreciation expense part of S, G & A and not shown explicitly; Taxes listed separately.


Cost of Goods Sold (COGS) is usually not calculated item-by-item, but rather determined at the end of the accounting period by measuring the net change in inventories..


The classification of expenses is somewhat subjective. Small expenses are usually grouped together.

Note: Not all “activities” are expenses.

For example, “Heat and Light” and “Insurance” could have bee grouped together as “daily office utilities” totaling £1,650.

accounting cycle and revenue recognition
Accounting Cycle and Revenue Recognition:

Suppose a customer orders a product – like a new car, say. When could revenue reasonably be recognized?

Question: What about property developers who collect deposits on unfinished condominium or housing projects?

revenue recognition on long term contracts
Revenue Recognition on Long-Term Contracts
  • Recognize according to work breakdown schedule of percentage of completion.