Income Statement

Income Statement

The income statement reports a company’s income or loss for a specific period.  It lists revenues and subtracts from them the period’s expenses. A positive balance results in an income and a negative balance indicates a loss.  In the example below revenues of $6,000 minus expenses of $3,000 results in a net income of $3,000. This figure is used in the Statement of Owner’s Equity

Your Business Name 

Income Statement

For Month Ended June 30, 20XX

Revenues
Net sales $5,000.00
Rental revenue

1,000.00

Total revenues

$6,000.00

Expenses
Wages expense $1,500.00
Cost of goods sold 1,000.00
Utilities expense 250.00
Supplies expense  250.00
Total operating expenses   3,000.00
Net income/loss $3,000.00

 

There are two formats commonly used to prepare income statements:

  • The Single-step
    The example above is a single-step income statement. It consists of just two sections: revenues and expenses. Expenses are deducted from revenues in a single-step to find net income or loss.
  • Multiple-step.
    In a multiple-step income statement, the results of transactions are shown in sections separating operating activities from non-operating activities. In addition, it classifies expenses by function. For example, selling expenses are shown separately from administrative expenses. If the company experienced extraordinary items or discontinued a segment of operations, they are also shown in different sections.

For professionally created examples of single- and multiple-step income statements for corporations and sole proprietorships, we recommend The Master Set of 80 Business Forms.

The set includes filled-in forms designed to give you a complete understanding of how each form works as well as blank forms for use in your own business or for practising income statement preparation.

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