An income statement is a summary of a firm's revenues and expenses during a specified accounting period. The income statement is sometimes called the earnings statement or the statement of income and expenses . A personal income statement for Marty Campbell is illustrated in Figure 17.3 . Figure 17.4 shows the income statement for Northeast Art Supply. Revenues are dollar amounts received by a firm.
Gross sales are the total dollar amount of all goods and services sold during the accounting period.
From gross sales, the following amounts are deducted. Sales returns, or merchandise returned to the firm by customers. Sales allowances, or price reductions offered to customers who accept slightly damaged or soiled merchandise. Sales discounts, or price reductions offered by manufacturers and suppliers to customers who pay their bills promptly. Net sales are the actual dollar amount received by the firm for the goods and services it has sold, after adjustment for returns, allowances, and discounts.