Running Head: FINANCIAL ACCOUNTING CONCEPTS

Financial Accounting ConceptsFinancial Accounting Concepts

An Income Statement reflects the differences between the revenues and expenses of a business over a period of time. Therefore, the items that are considered under this account are the Sales – which includes both cash and credit sales. Expenses include the cost of goods, which consists of all the expenses that are incurred by a business – from the stage of purchase of raw materials to the actual sale of the goods, including the overhead costs.(www.cbdd.wsu.edu, n.d.). Income statements do not reflect all the assets and liabilities of the Company. These are represented in a summarized, consolidated statement that shows the overall financial  position of the Company and provides information on assets, liabilities and owner’s equity.
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