Income Types Of Financial Accounting

Classification by Source

The classification by source can be divided into three:

a. Income statement or Statement of Comprehensive Income (SOCI)

b. Statement of Financial Position (SOFIP)

c. Mixed (i.e. combination of income statement and SOFIP)

Income Statement or Statement of Comprehensive Income (SOCI)

The income statement, which is also called the Statement of Comprehensive Income, is one of the main financial statement, along with the balance sheet, the statement of cash flows; and the statement of stockholder’s equity. The income statement is also referred to as the profit and loss statement of income, and the statement of operations. The income statement gives the financial reports of the revenues, gains or profits, expenses, losses. Net income and

The balance sheet reports a company’s assets, liabilities and stockholders’ equity as of a specific date such as January 31st 2016, June 31st 2016 etc. The financial analyst or accountant cost principle and the monetary unit assumption will limit the assets reported on the balance sheet. Assets will be reported in cases like;

i. if they were acquired in a transaction, or ii. at an amount that is not greater than the asset cost at the time of the transaction.

This simply means the company’s creative and effective management team will not be listed as an asset. Also, the company’s outstanding reputation, the brand names developed and the unique product lines within the company will also not be reported on the balance sheet. The accountants matching principle will result in assets such as building, furniture and fittings, equipment’s, vehicles etc. that is being reported at amounts less than these assets usually depreciate in value. Depreciation reduces an assets book value each year and these amount that is being depreciated is reported as depreciation expenses on the income