The income statement measures performanceover some period of time, usually a quarter or a year. The income statementequation is:
Revenues - Expenses = Income[2.2]
The first thing reported on an income statement would usually be revenueand expenses from the firm's principal operations. Subsequent parts include,among other things, financing expenses such as interest paid. Taxes paidare reported separately. The last item is net income (the so-calledbottom line). Net income is often expressed on a per-share basis and calledearningsper share (EPS).
If you think of the balance sheet as a snapshot, then you can thinkof the income statement as a video recording covering the period betweena before and an after picture. Table 2.2 gives a simplified income statementfor U.S. Corporation.
Table 2.2