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A major device for business owners is the income statement which measures the profitability of a firm over a period of time ? this could be a year, a quarter or even a month (See table 1) in a standard format. Items are individually recorded in a progressive process so the audiences can see the profit or loss with each entry (Block & Hirt, 2004). Furthermore, the difference between revenues and expenses is calculated to represent the company's net income or net loss. The income statement reports incomes and expenses on a transaction basis but are not factored into any major economic events. The limitations of the income statement is that accounting values are established primarily by actual transactions, and income that is gained or lost during a given period is a function of verifiable transactions...
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