Main Types Of Expenses That Are Shown On The Typical Income Statement

845 Words Aug 11th, 2015 4 Pages
What is the purpose of the income statement? Identify the major types of expenses that are shown on the typical income statement.
The purpose of the income statement is to show the revenue accounts and expense accounts within the organization. Typically, for accounting purposes, the revenue and expense line items are designated into two main categories. One category is for operating revenues/expenses that are accrued via normal business operations. The other category is for subsidiary revenues/expenses that are accrued via secondary business operations that are not related to the main operations of the business.
An expense is identified as the owner’s equity reducing due to the costs associated with running the business; this includes normal business operating expenses as well as secondary operating expenses. Typical expenses shown on an income statement include the purchase of material to be sold, the freight associated with that material, the purchase accounts in which you levied those material charges, salaries and wages of your employees- to include any employee benefits (I actually refer to this as ‘salary with burden’ on my statements), office supplies, lease/rental expenses for land, building, equipment, etc. To be clear, everything that is an expense is covered in this statement, once all expenses are identified and tracked, you then sub-divide them into how they contribute to the business operations. In my line of work, our income statements show operating…
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