Parts of an Income Statement (Part I)

Cost of goods sold expense is a huge item in an income statement and how it's reported can make a substantial impact on the reported bottom line.

The first and most important part of an income statement is the line reporting sales revenue. When does an ad agency report the sales revenue for a campaign it's prepared for its client? These are issues a company must decide on for reporting sales revenue, and they must be consistent each year, and the timing of reporting should be noted on the financial statement.

Other items in an income statement include inventory write-downs. Bad debts are also an important component of the income statement. Again the timing of when bad debts are reported is crucial.

The first and most important part of an income statement is the line reporting sales revenue. These are issues a company must decide on for reporting sales revenue, and they must be consistent each year, and the timing of reporting should be noted on the financial statement.

The next line in an income statement is the cost of goods sold expense. Cost of goods sold expense is a huge item in an income statement and how it's reported can make a substantial impact on the reported bottom line.