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Steps to Prepare an Income Statement Choose Your Reporting Period. Calculate Total Revenue. Calculate the Cost of Goods Sold (COGS) Calculate Gross Profit. Calculate Operating Expenses. Calculate Income. Calculate Interest and Taxes. Calculate Net Income.
The income statement is one of three statements used in both corporate finance (including financial modeling) and accounting. The statement displays the companys revenue, costs, gross profit, selling and administrative expenses, other expenses and income, taxes paid, and net profit in a coherent and logical manner.
An income statement shows a companys revenues, expenses and profitability over a period of time. Its also sometimes called a profit-and-loss (PL) statement or an earnings statement.
The income statement, also known as the profit and loss statement, includes all income and expense accounts over a period of time. This financial statement shows how much money the business will make after all expenses are accounted for. An income statement does not reveal hidden problems, like insufficient cash flow.
An income statement is a financial statement that shows you the companys income and expenditures. It also shows whether a company is making profit or loss for a given period. The income statement, along with balance sheet and cash flow statement, helps you understand the financial health of your business.
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The income statement shows a companys expense, income, gains, and losses, which can be put into a mathematical equation to arrive at the net profit or loss for that time period. This information helps you make timely decisions to make sure that your business is on a good financial footing.
To create an income statement of your own, follow these steps: Choose the correct income statement type. Create a heading. Generate a trial balance report. Calculate revenue. Determine the cost of goods sold (COGS) Calculate gross margin. Calculate operating expenses and income. Calculate income tax and net income.

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