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Sometimes events that alter a company’s income occur but don’t have a place on the income statement or require additional comments. Anything of this sort goes in the supplemental notes portion of the income statement. Examples include the following:

 A switch from LIFO inventory cost accounting to FIFO inventory cost accounting

 An unusual or infrequent event, such as finding an oil reserve where your new building is being constructed and selling it for extra revenues

 Any discontinued operations or unusual earnings from subsidiaries

By itself, the information you find in the income statement is great for tracking expenses and revenues, corporate revenue management, and dividend policy. But you can find out even more by comparing the same company’s income statements over a series of years. In fact, by watching for trends in a company’s income statements, you can identify successes or problems with specific operations that generate costs relative to the amount that the operations contribute to generating revenues. And, of course, you can compare the income statement of one company to the income statements of other companies in the same industry to determine how competitive that company is within the industry as well as how it should position itself regarding price and volume of output.