What is the incremental and loss statement?

Increment and profit statement is a financial document devoted to the income of the company for a certain period of time with income and sums recorded at the time the business transaction takes place. This is, unlike a cash -based statement that records income and expenditure at a time when transactions are actually rendered. Most large corporations must use the incremental and loss statement because it is preferred by generally accepted accounting principles. By using this type of statement and losses, businesses have the exact feeling of profit and loss, because revenue and expenses are associated with the time it will occur. Investors, creditors and regulators require companies

to create a precise representation of their financial conditions. They achieve this by providing financial statements that show important aspects of business such as cash flow, net assets and net income. Net income is represented in a profit and loss statement that takes all the revenue obtained from the sale and deduction of all the expenses collectedin the process of these sales. The additional and profit statement is the preferred method of representation of income by those who are interested in the known actual amount received by the company at the time it was earned.

6 On the other hand, the cash method is more concerned with when the money is paid and for society. There is a mismatch between these two methods, because many companies pay and receive a loan, which means that the actual money changes hands after the transaction.

As an example of how the increment and profit and loss statement works, imagine that the Company performs a 500 USD (USD) service in May in May. The customer who operates on the credit arrangement does not have the actual payment of the payment until June. With an incremental way, the receipts of $ 500 for this transaction would be added to the total May. Cash on the other side would show income in June in the amount of 500 uSd.

Generally accepted accounting principles stipulate that companies are considered to be shareholders and regulators that must use the incremental and loss statement. This is because the acrual method shows profits and losses at the time they are actually done. The cash method may distort the units of net income if there is a large range between the time when the products are sold or provided by services, and the time when payments are made.