How do you prepare an income statement in accounting?

Steps to Prepare an Income Statement

  1. Choose Your Reporting Period. Your reporting period is the specific timeframe the income statement covers.
  2. Calculate Total Revenue.
  3. Calculate Cost of Goods Sold (COGS)
  4. Calculate Gross Profit.
  5. Calculate Operating Expenses.
  6. Calculate Income.
  7. Calculate Interest and Taxes.
  8. Calculate Net Income.

What is income statement with example?

An income statement is a financial statement that shows you the company’s 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.

How do you write an income statement example?

How to prepare an income statement

  1. Step 1: Print the Trial Balance.
  2. Step 2: Determine the Revenue Amount.
  3. Step 3: Determine the Cost of Goods Sold Amount.
  4. Step 4: Calculate the Gross Margin.
  5. Step 5: Determine Operating Expenses.
  6. Step 6: Calculate Income.
  7. Step 7: Calculate the Income Tax.
  8. Step 8: Calculate Net Income.

What should include in income statement?

Once referred to as a profit-and-loss statement, an income statement typically includes revenue or sales, cost of goods sold, expenses, gross profits, taxes, net earnings and earnings before taxes.

What is the layout of an income statement?

The income statement follows a specific format. First, sales and revenue figures are recorded right at the top, which is followed by other income streams. Only then are the expenses deducted from total income. Ultimately, the document reveals the net profit/loss accrued by the business.

What items go on an income statement?

What items go on income statement?

The income statement presents revenue, expenses, and net income. The components of the income statement include: revenue; cost of sales; sales, general, and administrative expenses; other operating expenses; non-operating income and expenses; gains and losses; non-recurring items; net income; and EPS.

How do you prepare a balance sheet and income statement?