Profit And Loss Statement Hide Brand Logo For Free

The purpose of an income statement is to provide financial information to investors, creditors, and readers, whether the company is profitable during the financial year. In the context of corporate finance, the income statement is the record of the company's profit and loss over the financial year.

Financial Statement Preparations The income statement calculates the net profit or loss, which are determined by sales revenue, expenses, and general ledger records. The statement of retained earnings reflects the distribution of profit between retained earnings and dividends.

Steps to Prepare an Income Statement Choose Your Reporting Period. Your reporting period is the specific timeframe the income statement covers. ... Calculate Total Revenue. ... Calculate Cost of Goods Sold (COGS) ... Calculate Gross Profit. ... Calculate Operating Expenses. ... Calculate Income. ... Calculate Interest and Taxes. ... Calculate Net Income.

An income statement shows a company's revenues, expenses and profitability over a period of time. It is also sometimes called a profit-and-loss (P&L) statement or an earnings statement. It shows your: revenue from selling products or services.

The simplest formula used for income statements is: Revenue ? Expenses = Net Income. Multi step income statements have a more detailed formula: Revenue ? Cost of Goods Sold = Gross Profit ? Operating Expenses and Costs = Operating Income ? Non-operating Expenses and Costs = Net Income.

The income statement can be presented in a ?one-step? or ?two-step? format. In a ?one-step? format, revenues and gains are grouped together, and expenses and losses are grouped together. These amounts are then totaled to show net income or loss.

The four steps of writing an income statement are: Identify sources of revenue, as well as gains (from investments, for example) Identify company expenses and losses incurred over the same period. Consolidate revenue, expenses, gains and losses by category, payee or another factor.