The income statement reports a corporation’s net income for the period of time indicated in its heading. The income statement is also known as the statement of income, statement of earnings, statement of operations, profit and loss statement, or P&L.
Parts of an Income Statement:
Revenues. *Selling products (net sales),*Providing services (net service).
Cost of Goods Sold. Costs of goods made by the business include material, labor, and allocated overhead
Gross Profit. Gross profit is defined as net sales minus the cost of goods sold. This is important because the corporation’s gross profit amount must be sufficient to cover its selling, general and administrative expenses and to provide a sufficient amount of net income.
Expenses. Cost associated with main business activities. Example of expenses will include supplies, rent, advertising, commissions for employees and agents, interest.
Net Income. A corporation is required to issue annual financial statements, but it is common for a corporation to prepare monthly financial statements for its management.
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