An income statement and an account statement (or bank statement) are not the same, although both are important financial reports. They serve different purposes and contain different information.
Income statement:
Purpose: The income statement shows the income and expenses for a given period (usually a financial year) and calculates the profit or loss for that period.
Content: It includes income from all sources, such as membership fees, donations, event revenues, etc., as well as expenses like salaries, administration, event costs, and other expenditures.
Form: The income statement is usually divided into two sections: income and expenses. The difference between total income and expenses determines the result (profit or loss) for the period.
Function: The income statement helps assess the association’s financial performance and indicates whether the association has generated a surplus or incurred a deficit during the period.
Account statement (or bank statement):
Purpose: The account statement provides a detailed list of all financial transactions made on a bank account during a specific period. It tracks how the account balance changes over time.
Content: It includes transactions such as deposits, withdrawals, transfers, and any interest payments.
Form: The account statement is typically arranged in chronological order and contains details about each transaction, including the date, description, and amount.
Function: The account statement offers a detailed record of financial activities on the bank account and is used to track the movement of funds in and out of the account.
Although both the income statement and the account statement are essential in accounting, they serve different purposes and contain different types of information. The income statement focuses on summarizing income and expenses to determine financial performance over a specific period, whereas the account statement provides a chronological record of all transactions in a bank account. However, both reports are valuable for understanding and managing the association's finances.