A legal doctrine that holds an individual or business accountable for damages whether or not it was at fault. In a strict liability case, no matter how careful the business is in its product or service, if harm results from use, the individual or business is liable.
Along with the balance sheet, cash flow statement and the statement of changes in ownersâ equity, the income statement is also one of the essential means of financial reporting. It indicates whether or not the firm has made money during the period reported.
Recording the initial part of the transaction will not flow through the income statement but only on the balance sheet. As the lease payments are made, unearned income will shift into earned income at a constant rate based on the term of the lease. As the income is earned, it will flow through the income statement.