In accounting, income statements (also the statement of earnings) are a type of financial statement that report revenues and expenses. They report the results of operations for a specific period of time.
Basically report how you performed.
Note: cash isn’t a requirement to record sales — for those documents, it’s a question of whether or not you’ll get the cash, not if you’ve already received it.
Elements
The income statement has the following fields:
- Revenues — arise from the sale of a product or service. Results in an inflow of assets.
- Expenses — costs of assets consumed or services used to generate revenues. Results in an outflow of assets.
- Net income/earnings (“the bottom line”) — revenues minus expenses. Earnings per share.
The key result of the income statement is the net earnings. It refers to the overall “reasonableness” of reported earnings. Are they sustainable?
The cost of goods sold essentially finds what is available to sell at the beginning of the period minus what is left over.
Construction
The title needs these elements:
- Company name
- “Income Statement”
- “Period Ending X Date”
Note:
- For rent, we list all the rent for the period. This includes pre-paid rent and outstanding rent. For example, for 2 months pre-paid and 1 month outstanding, we list all 12 months anyways.