Formats of an income statement

There are many types of income statement. Some of them are used often, and others are used quite rarely. The most experienced accountants are acquainted well with the following types:

  • Classified income statement;
  • Comparative income statement;
  • Condensed income statement; 
  • Contribution margin income statement;
  • Cash basis income statement
  • Partial income statement.

All of them have a different structure. Thus, one should use different methods and techniques of accounting to work with them. 

Formats of an income statement

Types of an income statement

The classified income statement is divided into income and expenses from the core and non-core activities.

The comparative income statement is a financial report that provides tabular information about financial indicators over many years so that comparisons can be made. It is used to analyze changes and identify trends.

The condensed income statement provides general information on revenues and expenses. It provides only a summary and the net income amount.

The contribution margin income statement has other functions. The traditional profit statement for external use classifies expenses by functional criteria, i.e., production and non-production (operating) costs. Statement of profit and loss account drawn up in the alternative form, known as a contribution margin report. It classifies costs on a behavioral basis, regardless of the function corresponding to the costs, and reflects the interaction of variable and fixed costs.

The margin-based approach provides managers with useful information for planning and making decisions. In the contribution margin income statement, margin stands out is the difference between sales and variable costs. In a traditional report, gross profit is calculated as the difference between revenue and cost of sales.

The concepts of gross and margin profit are not related to each other and do not affect each other. Gross profit covers non-production costs, and margin covers fixed costs. The following reports are compiled in the traditional format and the profit margin format.

The cash basis income statement contains information about income that is credited to the firm’s cash accounts and expenses that were paid in the current period.

The partial income statement contains information for the part of the period.


There are certain requirements for income statements based on accounting data:

Reliability and completeness. The financial statements should include data necessary for forming a reliable and complete view of the financial position of the organization, its financial results, and changes in its financial position.

Neutrality. When forming financial statements, the organization must ensure the neutrality of the information contained in it, i.e., the unilateral satisfaction of the interests of some groups of users of financial statements is excluded. Ideally, financial statements should meet the interests of all its users.Materiality. Indicators on individual revenues, expenses, business operations, and other components should be omitted or misstated if their absence may affect the implementation of economic decisions by interested users, the assessment of the financial position of the organization, or the financial results of its activities.

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