What is the basis of income statement?

Fundamental analysis is a relatively large statement, which involves a lot of specific, including financial report analysis, index analysis, industry analysis and so on. So, what is the basis of the income statement?

The principle of income statement is the accounting balance formula of "income expense = profit" and the matching principle of income and expense.
In the production and operation, the enterprise constantly produces various expenses, and at the same time obtains all kinds of income. After deducting the expenses, the remaining part is the profit of the enterprise. The comparison between the income obtained and the related expenses incurred is the operating results of the enterprise. If the enterprise does not operate properly, and the production and operation expenses exceed the income, the enterprise will have a loss; otherwise, the enterprise can obtain a certain profit. The accounting department should regularly (generally by month) check the operating results of the enterprise, and prepare the accounting results into statements, which forms the profit statement.
business income
Less: operating costs
Business tax and surcharges
selling expenses
Administrative expenses
Financial expenses
assets impairment loss
Add: income from changes in fair value (loss is indicated with "-")
Investment income (loss is indicated with "-")
Operating profit (loss is indicated with "-")
Plus: non operating income
Less: non operating expenses
Total profit (loss is indicated with "-")
Less: income tax
Net profit (loss is indicated with "-")
Supplementary information: (extraordinary items)
1. Income from selling or disposing departments or invested units
2. Losses caused by natural disasters
3. Increase (or decrease) in total profit due to changes in accounting policies
4. Increase (or decrease) in total profits due to changes in accounting estimates
5. Debt restructuring losses
6. Others
Earnings per share:
(1) Basic earnings per share
(2) Diluted earnings per share

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