12 Essential Income Statement Accounts

  • Jul 26, 2021
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The income statement accounts, refers to the accounts that companies use in their profit and loss statements to include them in their records, they facilitate the information about your income statement and are used to perform net income calculations, once each period ends accountant.

The basic income statement accounts they can have certain variations between the different companies, this is because the income and expenses vary according to the type of operations and negotiations that are executed. Despite this, there are several general items that can be easily found in any income statement.


Essential Income Statement

In this article you will find:

Main accounts of the income statement

Between the most important accounts of the income statement and most used by companies, are the following:


1. Income

It refers to increases in assets or decreases in liabilities that come from the various activities of the company's operations. Generally, income accounts have credit balances and can be compared to expenses that calculate net income.

2. Sales

Sales is the main data found in an income statement and belongs to the income that the company obtains as a result of the sales it makes during the time that the analysis.


3. Sales discounts

It is a counter account, which includes discounts that are granted to customers on the value of the gross sale.

4. Value of goods sold

It is the value of the merchandise or manufactured products that are sold during a period. It is the difference between the cost of goods that are available for sale and the value of those that are available for the end of the accounting period.


It can be segregated in the additional accounts to record the cost of materials, labor and manufacturing.

5. Expenses

These are decreased in assets or increased in liabilities that come from the different operational tasks that are carried out to increase income. Expense accounts mostly have a debit balance and can be classified into sales, administrative, and general.


It is important to note that the value of the products sold is also an expense, however, they are shown separately from other operating expenses. These expenses must be subtracted from income in order to specify net income.

6. Other expenses

There are other expenses that represent non-operating income or expenses that comprise extraordinary items, some of these expenses are:

  • Insurance expenses: It is the cost that recognizes construction insurance and liability insurance in general.
  • Compensation expenses: These are the costs of wages and salaries of all workers included in the time period of the report. These expenses include commissions, severance pay and bonuses.
  • Rental expenses: These are the costs that come from the payments for the rental of the land and facilities that the company leases.
  • Marketing expenses: Includes the costs of all expenses that involve advertising, brochures and publications.
  • Repair and maintenance expenses: Contains the costs of activities related to the repair and maintenance of maintenance that arise in the company and are not registered within the production activities.
  • Office material expenses: These are all those costs that come from the complementary supplies that the company requires and are not linked to production activities.
  • Public service expenses: Refers to the cost of all services such as electricity, gas, water, telephone, among others.
  • Travel and training expenses: Includes the costs of mileage reimbursements, hotels, airline tickets and other expenses generated by employees.

7. Taxes

Taxes can be classified as follows:

  • Income taxes: If the company is subject to income tax, the amount will be recorded in this account.
  • Property tax: This is the property use tax and other taxes charged by local governments.
  • Payroll taxes: Includes the amount of taxes paid by workers, such as social security.

8. Employee benefits

They are the payments that the company makes to cover various benefits granted to employees, such as life insurance, medical insurance and pension plans.

9. Professional fees

They are all those costs that the company invests in lawyers, auditors and consultants.

10. Utility over flow

Indicates the financial nature in charge of measuring the profits or profit that the company generates without involving taxes and financial or accounting expenses that do not include a real money outflow from the business such as amortization and depreciation.

11. Operating profit

It is the difference provided by the subtraction between depreciation and amortization at the profit on the flow, which allows a loss or gain in the productive activities of the business.

12. Extraordinary items

It refers to the income or expenses that are presented for activities that are not ordinary and that the company hopes will not be repeated. frequently, as is the case with natural disasters, anticipation of debt withdrawals, expropriation of property, among other These extraordinary items are usually reported net of taxes.

The most important income statement accounts, are used in the profit and loss statement, which are included in the general ledger after the accounts used to be placed on the balance sheet. Many companies require additional accounts or fewer than those mentioned, it all depends on each company. If you want to see more topics visit the web.

Sources and references

  • Mendez A. (2018, December) What is an income statement?
  • Chen J. (2021, March) Income Statement.
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