Anatomy Of An Income Statement

The income statement which is commonly referred to as a profit and loss statement summarizes an organization's revenues (sales) and expenses. The time frame that an income statement reflects should be displayed in its heading. An income statement measures profitability and recognizes revenues when they are realized or when the service is rendered.

The Basic information on an Income Statement is the businesses' revenue, expense, and profit / loss.

Revenue can be described as all income that a company receives. On actual income statements the revenue is generally broken down into sub-categories or displayed on different lines. Typically revenue is categorized by whether or not the income was derived from normal business activity or not.

Expense on an income statement is simply the outflow of money or value from the business to another entity. Expenses are also categorized in much the same way as revenue is on an Income Statement. For example, Cost of Goods Sold (COGS) only summarizes the direct cost or expense of creating the businesses' product or service, while your depreciation costs would be on a different line.

1. Microsoft Excel can be setup to provide the data for these statements.

2. Calc is a free Excel-like product from OpenOffice that can be setup to provide the data to prepare these statements.

3. Quickbooks is a popular Small Business accounting program that can be used to provide these statements.

Utilizing the figures provided by the Income Statement you can determine whether or not the company is profitable (more value being received into the business than flowing out) but analysis of the balance sheet and cash flow statement will provide a full picture of the businesses' health.

Article Source: http://www.search4allinfo.com

Are you getting the results you need? We hope that the organizational help article was informative; we welcome you to visit us and get more detailed internet marketing, website design and website hosting advice and solutions for your business!

Please Rate this Article

5 out of 54 out of 53 out of 52 out of 51 out of 5 

Not yet Rated