2.3.2: AN INCOME STATEMENT AS AN INFLUENCE CHART

In section 2.3.2 we look at Income Statements as an influence chart, which is defined as a standard accounting framework used to report for performance of a company in the past.  When we look at an income statement we see the bottom line is the retained earnings are calculating the difference of revenue from costs, taxes, and dividends.  We must decompose total revenue into the quantity sold and price, therefore we would be express this on the chart by adding price as a decision enclosed in a square  and quantity sold enclosed in a circle as a variable all pointing to the total revenue, since that is what will be affected.  Then we must take it a step further and decompose Quantity sold in Price and Price Elasticity.  Price already reflects on the chart as a decision, but it must have an arrow pointing to quantity sold, since this will affect the price, and then we would add elasticity as an input parameter.  This would be enclosed in a triangle and also point towards quantity sold as a factor of the overall price and quantity sold.