Section 1
Understanding the Income Statement
Book
Version 3
By Boundless
By Boundless
Boundless Accounting
Accounting
by Boundless
4 concepts
![Thumbnail](../../../../../../figures.boundless-cdn.com/12681/square/4857-antique-cash-register.jpeg)
Revenue
Revenue refers to the mechanism by which income enters a company.
![Thumbnail](../../../../../../figures.boundless-cdn.com/12682/square/387599-a-thousand-dollars.jpeg)
Cost of Goods Sold and Gross Profit
Gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service.
![Thumbnail](../../../../../../figures.boundless-cdn.com/12683/square/353454-piggy-bank-3.jpeg)
Operating Expenses, Non-Operating Expenses, and Net Income
Operating expenses and non operating expenses are deducted from revenue to yield net income.
![Thumbnail](../../../../../../figures.boundless-cdn.com/12684/square/1388612-market-movements-2.jpeg)
Income Statement Formats
Income statements are commonly prepared in two formats: multiple-step and single-step.