Assumptions in the Income Statement

• Business Entity Assumption: A business's transactions are kept separate from those of its stakeholders, except for sole proprietors.
• Monetary unit assumption: Transactions in the income statement are not adjusted for inflation.

In the income statement, a business's expenses and income are recorded separately from its stakeholders, except in the case of sole proprietors. This helps to accurately track the financial performance of the business.

Additionally, the transactions in the income statement are not adjusted for inflation, meaning that they are recorded at their original value