Income from Operations

• Income from operations, or operating income, appears in the top section of the income statement. Accounts in this section generally include sales revenue, cost of goods sold and any operating expenses in selling, administrative and general activities. Operating income can also be expressed as gross profit less operating expenses. Gross profit is sales revenue after cost of goods sold, which usually consists of inventory and material cost of the goods sold. Operating income pertains to a company's main-line business operations.
  
  

Non-Operating Income

• A company may engage in other business activities that are secondary to what a company typically does. For example, a company's investments in financial securities would be considered non-operating transactions. The section for non-operating income includes two general accounts often labeled as "other revenues and gains" and "other expenses and losses." Interest revenue from an investment would, thus, go to the account of other revenues and gains. The sum of non-operating income and operating income from the earlier section often is designated as income from continuing operations.
  
  

Discontinued Operations

• A company may discontinue certain operations from time to time. Income from discontinued operations plus any gains or losses from disposal of an operation are not reported as part of the income from continuing operations and must be presented separately. A company may shut down a business division and sell it to another company. Any income from the final operation of the division, along with a sales gain or loss, is reported under discontinued operations. Numbers recoded in this section are presented as net of income tax so they can be totaled directly with the after-tax income from continuing operations.
  
  

Extraordinary Items

• Extraordinary items are non-recurring material events or transactions that must be both unusual and infrequent in their occurrence. Extraordinary items often differ significantly from a company's typical business activities and should be reported separately. For example, a flash flood at a company's operation facility is an extraordinary event, and any related cost of damage is reported as an extraordinary loss under extraordinary items. Companies may also experience certain unusual gains or losses that are unusual or infrequent, but not both, and, as a result, companies don't report them as extraordinary items. An asset write-down would be an unusual loss, and companies may report it in the non-operating income section.