Accounting & Operations Outsourcing Firm
  • Welcome
  • About
  • Blog
  • Contact
  • Operations Solutions
  • Accounting Solutions
  • Shop Solutions
  • Welcome
  • About
  • Blog
  • Contact
  • Operations Solutions
  • Accounting Solutions
  • Shop Solutions
Search

Accounting & Operations Blogger

3 Tips To Understanding The Income Statement

9/10/2018

0 Comments

 
Picture
​As a business owner, have you ever felt left out of a conversation when others start to talk about their financial statement reports?  When you start to hear words such as, P&L, profit and loss, statement of earnings or income statement --- the conversation may start to feel a bit awkward and overwhelming. That’s why we’re going to dive into how to understand more these statements.
 
Understanding the income statement is essential to business owners and investors as it provides an overview of the profitability and future growth of your business.  All business owners should see the income statement as a simple and straight forward report on a business’s cash generating ability.  It is a scoreboard on the financial performance of your business that reflects when sales are made and expenses are incurred.
 
The official definition says an income statement is:
 
A financial statement generated monthly and/or annually that reports the earnings of a company by stating all relevant revenues (or gross income) and expenses in order to calculate net income.  Also referred to as a profit and lost statement.
 
The income statement is one of the five financial statements issued by a business.  It reports the amount a corporation has earned during the period between two balance sheet dates.
 
Here are 3 things you should know about an income statement:
 
Income Statements come with Accounting Jargon
One thing that can make entrepreneurs shy away from financial statement conversations is the jargon used.  The jargon can make it seem more complex than it really is.  For example, the term “sales” or “income” might be used instead of revenue.  “Expenses” and “costs” are also used interchangeably.  “Profit” is sometimes called “net income. 
 
Income Statements cover a period of time
The income statement reveals how much money your business made over a period of time.  Most often, the statement will reflect the performance over a month, a quarter or a year. 
 
For example, you might hear the words, year to date, or see “Y-T-D December 31”, indicating the period for Jan 1 to Dec 31. 
 
Income Statement follows a formula
Every income statement, no matter how complex, follows a very simple formula.
 
Revenue – Expenses = Profit
 
For the period specified on the income statement, it will show the revenue the business earned, the expenses it incurred and the profit it made.
 
If you want to understand how your business operations flows, the income statement can help give you a better picture of what makes your company profitable and where the losses are coming from.

    Join Our getting to know accounting Newsletter

Subscribe to Newsletter
0 Comments



Leave a Reply.

       get our Accounting & operations Tips and News in your Inbox 

    Subscribe Today

    Archives

    December 2019
    November 2019
    September 2019
    December 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    February 2018
    December 2017
    November 2017
    August 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016

    Categories

    All
    Accounting
    Accounting Education
    Accounting Solutions
    Account Reconciliations
    Business Solutions
    Entrepreneur News
    Newsletter
    Oil And Gas
    Policies & Procedures



    Author

    My mission is to offer the best accounting and operations solutions and tips for entrepreneurs and small to mid-size companies worldwide seeking to close their process gaps with actual solutions.  


      Sign up for our email newsletter

    Subscribe

    RSS Feed

We Work to Provide Unique Solutions

"Our team of innovative professionals use their knowledge and experience to set your business and team of professionals  up for success.  Our extensive accounting and operations skills are a start and  key tools to company growth, building team cohesiveness, establishing clear purpose and goals, and improving process  inefficiencies.  Our services are key to businesses of all sizes.  We handle providing the detail framework to your business so that you may focus on building your business.

We also additional services and support with monthly  operational and accounting task, reconciliation and training."

Contact Us

STAY CONNECTED

NEWS & TIPS IN YOUR INBOX
JOIN IN NOW
Photo used under Creative Commons from Rennett Stowe
  • Welcome
  • About
  • Blog
  • Contact
  • Operations Solutions
  • Accounting Solutions
  • Shop Solutions