Income Statement Mnemonics

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Income Statement Mnemonics

For this article, refer to the following example income statement:

Although the following two mnemonics may not account for every line on an income statement, they will help you remember the major parts, and the order in which they appear.

The word SONAR identifies the major sales and earnings.

The word EDIT summarizes major expenditures.

As you look vertically down the row of letters, you should discover the spelling of SONAR. The vertical set of letters in the second column spells out EDIT. Does that help you remember?

S = Sales (gross)

O = Operating income (before interest and taxes)

N = Net earnings

A = Available earnings for common stock

R = Retained earnings


E = Less expenses (general operating expenses and cost of goods sold)

D = Less depreciation

I = Less interest

T = Less taxes