Abstract The article presents information on income statement and it's significance in financial reporting. The development of the corporate form of organization continues to emphasize the primary importance of the income statement in financial reporting. A few years ago the balance sheet was considered to be of primary importance. Even now some think that the submission of a balance sheet is adequate. Those versed in accounting know that both the balance sheet and the income statement are needed in order reasonably to appraise the financial condition of an enterprise at a given moment. Since 1939 thirty-three Accounting Research Bulletins have been issued by the Committee on Accounting Procedure of the American Institute of Accountants and, indicative of the recognition of the importance of the income statement in financial reporting, with a few exceptions they treat primarily of the income statement. The objective has been to narrow the area of difference in practice and to establish a basis of greater uniformity with respect not only to the composition of items included in the income statement, but also as to their presentation. In attaining these objectives, people must recognize that the income statement should be informative and it should reflect the facts in accordance with accepted accounting practice.

Abstract As accountants, our responsibility is to report on the trusteeship of management. Management in turn should not be charged with accountability for assets and liabilities or for the determination of income on a basis other than the basis of the actual assets that were placed in use and consumed in operations. Furthermore, as accountants, we should firmly resist efforts to confuse accounting principles with devices to secure increased rates for a utility or to obtain income tax deductions. An accounting principle is supposed to apply with equal fairness and reasonableness in all situations where applicable, whereas a device is simply an expediency for a special situation. Historical cost of assets is not a fetish as some assert, but it is the actual basis on which management does its planning and operates the enterprise. Is not depreciation then the amortization of a capital expenditure that represents a charge to income of the actual cost of the expenditure over the useful life of the asset represented thereby? How can depredation with fairness and reasonableness be anything else than that?