[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-315628-105":59,"doc-detail-315628-en":134},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":127,"head_meta":129,"extra_data":131,"updated_unix":133},105,"en","chapter-8-income-statement-key-terms","CHAPTER 8 - INCOME STATEMENT - Key Terms","","Training material focused on calculating profit using the definitions of revenue and expense within an income statement framework. It explains how profit is determined as Revenues minus Expenses, clarifying that cash received is not automatically revenue and cash paid is not automatically an expense. The chapter contrasts increases and decreases in assets, liabilities, and owner’s equity, and explains why reporting periods are required to measure performance.",{"@graph":69,"@context":126},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":20,"@type":76,"position":81},"https://docshare.wps.com/document/exam/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/chapter-8-income-statement-key-terms/315628/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/chapter-8-income-statement-key-terms/315628.png","ImageObject",300,407,{"name":92,"@type":93},"Theodora","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-03","2026-09-20",true,{"@type":102,"interactionType":103,"userInteractionCount":39},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118,122],{"name":109,"@type":110,"acceptedAnswer":111},"How do you calculate profit in an income statement?","Question",{"text":112,"@type":113},"Profit is calculated as Revenues minus Expenses, meaning profit is what remains after expenses are deducted from revenues.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"What makes an inflow count as revenue?",{"text":117,"@type":113},"Revenue must be an inflow of an economic benefit (or saving in an outflow) that increases assets or decreases liabilities, resulting in an increase in owner’s equity (except capital contributions).",{"name":119,"@type":110,"acceptedAnswer":120},"How does an expense reduce owner’s equity?",{"text":121,"@type":113},"An expense is an outflow or consumption of an economic benefit that decreases assets or increases liabilities, leading to a decrease in owner’s equity (except drawings).",{"name":123,"@type":110,"acceptedAnswer":124},"Why are reporting periods important for determining profit?",{"text":125,"@type":113},"Reporting periods let owners divide the business life into arbitrary time frames so profit can be determined, which supports timely information about performance even though the business is assumed to be ongoing.","https://schema.org",{"og:url":83,"og:type":128,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":130,"canonical":83},"index,follow",{"doc_id":132,"site_id":62},315628,1790515711,{"code":4,"msg":5,"data":135},{"doc_id":132,"user_id":136,"nickname":92,"user_avatar":137,"doc_module":4,"category_id":19,"category_name":20,"doc_title":65,"doc_description":67,"doc_content":138,"file_id":139,"file_url":140,"file_type":141,"file_size":142,"view_count":39,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":143,"language":144,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":145,"faqs":146,"seo_title":147,"seo_description":67,"update_tm":148,"read_time":149,"preview_page_count":4},687197207919,"https://ap-avatar.wpscdn.com/avatar/a000253d6f5f7c60be?x-image-process=image/resize,m_fixed,w_180,h_180&k=1779446848396160552","Where are we headed?  \nAfter completing this chapter, you should be able to:  \n• identify and define revenuesand expenses  \n• calculate Net Profit or Loss  \n• prepare an Income Statement  \n• report a Net Profit or Loss in the Balance Sheet  \n• distinguish between cash and profit  \n• explain the uses of an Income Statement.  \nCHAPTER 8  \nINCOME  \nSTATEMENT  \nKEY TERMS    \nAfter completing this chapter, you should be familiar with the following terms:  \n• revenue  \n• expense  \n• Income Statement  \n• Net Profit  \n• Net Loss.  \n142  CAMBRIDGE VCE ACCOUNTING UNITS 1&2  \nRevenue  \nan inflow of an economic benefit (or saving in an outflow) in the form of an increase in assets (or decrease in liabilities) that increases owner’s equity (except for capital contributions)  \n8.1 CALCULATING PROFIT  \nThe most basic function of any small business is to earn a profit for the owner, so from time to time the owner must calculate whether a profit or loss has been generated.  \nBasically, profit is the net increase in the owner’s equity as a result of the firm’s operations. It is calculated by measuring the firm’s revenue (what it has earned from its customers for performing a service) and deducting from this its expenses (what it has cost the business to provide those services) . Thus the calculation of profit is simple enough – profit is what is left over after expenses are deducted from revenues. That is:  \nProfit = Revenues − Expenses  \nHowever, not all the cash the business receives is as a result of its trading activities, and therefore not all of it is revenue. The same applies to cash payments: not all cash payments are expenses. In fact, the definitions of revenues and expenses are quite specific.  \nRevenue  \nRevenue is defined as an inflow of an economic benefit (or saving in an outflow of an economic benefit) in the form of an increase in assets or reduction in liabilities that leads to an increase in owner’s equity (except for a capital contribution) .  \nLet’s break this definition into its components as we did for the definitions of assets and liabilities. A revenue must be:  \n• an inflow of an economic benefit (or saving in an outflow)  \nNote that rather than specifying cash, the definition refers to economic benefits that come into the firm. Revenue for a service firm will usually be cash, but it does not have to be; the economic benefit could be in the form of a debtor (if services are provided on credit), or even stock (for a stock gain) .  \nCHAPTER 8 INCOME STATEMENT  \n• an increase in assets (or decrease in liabilities)  \nIf a service is performed for cash, then the asset which increases will be Bank, but there could be other assets received from earning revenue, like Debtors.  \n• an increase in owner’s equity (except for capital contributions)  \nRevenue must increase what the business owes to the owner, but it cannot be as a result of a capital contribution, as this is not a result of the firm’s operations.  \nRevenue then represents the increase in owner’s equity that occurs through business activities, and in most cases will be what the business has earned from the services that it has provided to its customers. The key here is that a revenue must increase owner’s equity, but not as a consequence of the owner making a contribution.  \nExpenses  \nAn expense is defined as an outflow or consumption of an economic benefit (or reduction in an inflow of an economic benefit) in the form of a decrease in assets or increase in liabilities that leads to a decrease in owner’s equity (except for Drawings) .  \nTherefore, an expense must be:  \n• an outflow or consumption of an economic benefit (or reduction in an inflow) Whereas assets refer to future economic benefits – benefits the business still has – expenses refer to benefits that have been consumed (or used up), and are thus gone. For instance, there is no lasting benefit from paying wages – if the owner wants the employee to work again next week, another payment will be required. How","cbCaigktmPkHAcK1","https://ap.wps.com/l/cbCaigktmPkHAcK1","pdf",2944774,18,"English","# Calculating Profit\n## Revenue Definitions\n## Expenses Definitions\n## Reporting Period and Relevance\n# Study Tip","[{\"question\":\"How do you calculate profit in an income statement?\",\"answer\":\"Profit is calculated as Revenues minus Expenses, meaning profit is what remains after expenses are deducted from revenues.\"},{\"question\":\"What makes an inflow count as revenue?\",\"answer\":\"Revenue must be an inflow of an economic benefit (or saving in an outflow) that increases assets or decreases liabilities, resulting in an increase in owner’s equity (except capital contributions).\"},{\"question\":\"How does an expense reduce owner’s equity?\",\"answer\":\"An expense is an outflow or consumption of an economic benefit that decreases assets or increases liabilities, leading to a decrease in owner’s equity (except drawings).\"},{\"question\":\"Why are reporting periods important for determining profit?\",\"answer\":\"Reporting periods let owners divide the business life into arbitrary time frames so profit can be determined, which supports timely information about performance even though the business is assumed to be ongoing.\"}]","CHAPTER 8 - INCOME STATEMENT - Key Terms | PDF",1789905549,45]