red. These statements are used both by internal and external audiences in order to evaluate the company's current position and determine its potential for future success. Because American accounting principles demand that similar assumptions are made regardless of the company preparing the statements, individuals who analyze these statements can be confident that cross-company or cross industry comparisons will be based on similar types of information. Indeed, public companies regularly have their financial records audited by independent auditors; the goal of these auditors is not to verify whether the information presented on the statements is true or false, but rather than generally accepted accounting principles (GAAP) and accounting regulations have been followed in the preparation of the statements (Gay, Schelluch & Baines, 1998, p. 472).
The income statement indicates whether a company has been profitable, and the degree to which the company has enjoyed a profit. Fundamentally, the income statement shows the amount of revenue received, the cost of generating that revenue, operating expenses, and the resulting profit. Revenues from non-operational functions (such
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