Income Statement

Structure of an Income Statement

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Priya Kaur

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Christian Bien

Learning Objectives

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Definition of 'Comprehensive Income'
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The AASB 101 defines 'comprehensive income' as the change in the business equity during the period NOT resulting from transactions concerning the contribution and withdrawal of capital by the owners. Hence, the change in business equity may result from: 

  1. The profit or loss from trading activities of the business (revenue - expenses + other income) OR 

  2.  The gain or loss in the value of assets, for example: 

  • Revaluation of non-current assets (e.g. land) 

  • Gains or losses in foreign currency transactions 

  • Gains or losses in financial assets and liabilities such as loans, deposits and receivables

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Format of the Statement of Comprehensive Income
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Above is the prescribed format for the statement of comprehensive income to be used in Unit 4. The statement is divided into 2 sections. 


1) The top part consists of an Income Statement concerning trading revenue and expenses 2) The bottom part consists of 'Other Comprehensive Income', which deals with other gains and losses. Several features to take note of: 

  • Revenue is gained through the business's main trading operations in the form of sales or fees. 

  • Cost of Sales include the operating expenses directly related to the purchase of inventory. 

  • 'Other Income' and 'Expenses' are listed separately. AASB 101 and 118 require the specification of what falls in 'Other Income' (rent, interest) and 'Expenses' to be classified by nature or function. (Recall in Unit 2 Accounting, the classification of expenses in the income statement consists of: 1) Selling and Distribution, 2) General & Administration and 3) Financial Expenses). 

However in the Unit 4 Syllabus students are NOT required to be shown as part of the statement. - 


  • 'Finance Costs' are recorded separate to 'Expenses'. Finance costs consists of the costs of borrowing money and establishment fees. E.g. Interest Expense on Mortgages, Loans and Debentures, Loan establishment fees - cost of acquiring the loan. 

  • 'Expenses' generally consist of selling & distribution expenses (advertising, doubtful debts, freight outwards) and general & administration expenses (insurance, office salaries, depreciation of office equipment). 

  • The only 'Gain or Losses' dealt in this Unit will be concerning Asset Revaluation.

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Structure of an Income Statement
Construct a Simple Income Statement
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