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How to Calculate Investment Income on Statements of Operations

Original post by Charlotte Johnson of Demand Media

Expenses are deducted from gross income on a statement of operations to determine the net income.

One of the major types of financial statements that companies produce is known as a statement of operations, which shows how much a company makes, as well as its expenses. Another common name for a statement of operations is an income statement. A portion of many businesses' income is classified as investment income. Investment income must be added to what the company earns through sales in a given year in order to determine the company's gross revenue.

Contents

Step 1

Write down the yearly income amounts under various types of investment income, including interest, cash dividends, rent, gifts and net realized capital gains. This section typically falls underneath the section for revenue.

Step 2

Add the investment income figures. For example, if a business has $5,000 interest, $4,000 cash dividends and $2,000 net realized capital gains, you would add those three figures together for a total of $11,000 in investment income.

Step 3

Add your total investment income to the total revenue that is separate from investment income in order to calculate the gross income. For example, if a business made $500,000 on the production of a particular product, you would add 500,000 to 11,000 (from the previous example) to get a gross income of $511,000.

Step 4

Add the expenses and subtract them from the gross income figure that you calculated to determine the company's net income. For example, if the gross income is $511,000 and the expenses were $25,000, you would subtract 25,000 from 511,000 to get a net revenue of $486,000.


                   

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References

About the Author

Charlotte Johnson is a musician, teacher and freelance writer with a master's degree in education. Johnson has written numerous articles for various websites. She has covered a wide range of topics including health, education, the arts, animals and parenting.

Photo Credits

  • Medioimages/Photodisc/Photodisc/Getty Images


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