From the course: Financial Accounting Part 2

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Review of the income statement

Review of the income statement

From the course: Financial Accounting Part 2

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Review of the income statement

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- The second primary financial statement is the income statement. Revenues minus expenses equals net income. This is the financial statement that people talk about all the time. We use the terms revenues and expenses all the time so let's make sure we know what these words mean. In an accounting context, revenue means the amount of assets generated in doing business and different companies generate assets in different ways. Walmart, for example, generates assets by putting things on shelves that you and I buy. Microsoft creates assets by creating software and hardware that you and I then buy and we pay Microsoft for those things. Disney has consumer products, they have cruises, they have theme parks. We pay to use those things or to buy those products and that's how Disney generates assets. Revenue is the amount of assets generated in doing business. Think of revenue as another way for a company to acquire assets. Just…

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