An income statement template is a document used by most companies and businesses to organize their finances in a proper method and calculate their net income annually or monthly. This statement is created by the directors of the company, as they have all the record of the past sales, income, expenses, and revenue. The purpose of creating an income statement is to check whether the business is gaining profit or loss. It enables the business owner to predict their future sales as well and make up for the losses in the past month/year. It indicates where the company faced loss and helps them to devise a better plan to improve their sales. However, an income statement is just a list of calculations made from the amount of money earned from sales and the money lost on expenses because of the sales like; putting out advertisements, and distributing flyers.
Agenda of a Income Statement
The main agenda of an income statement is to help the organization to check their net income after subtracting the revenue from sales. This is the main purpose of an income statement, whereas, the financial and loss and profit statement provide other information about their sales. When a company wants to assess their sales and learn about their profit and loss, they ask their directors and management to provide a financial , loss and profit and income statement. These three statements are analogous and facilitate the organization in understanding their current financial status and measuring how much they have gained or lost in a specific time period.
Importance of a Income Statement
An income statement benefits the company by helping them understand how they can improve their sales based on their previous income statement. It demonstrates how well the company has been doing in the past and how they can increase their income efficiently. The statement enables the company to devise new tactics to expand their sales and revenues. After assessing your company’s income statement, you can decide whether you need to increase revenues, interest or selling strategies of your product. Altogether, we get the idea that an income statement is crucial for a business to improve their performance in all factors, especially in finances.
What to Include in a Income Statement?
The income statement template is always initiated by mentioning the company’s name and the time frame whose sales are being analyzed. Next up we start stating the gross sales, amount of income, revenues, net total income, income before taxes, amount of profit, operational expenses, losses and depreciation expenses. The person who is making the income statement can separately make the list of all these expenses in a proper manner. Such that first mention the sales and related factors (income before and after taxes, net total and profit). Then you can make a list of expenses and losses. This way, the reader gets a clear idea about their company’s financial status. Basically, an income statement is a short list of all the above mentioned topics and their respective amounts. At the end of the list there is the total income gained after calculating the profits, loss, tax inclusions, and expenses.
Income Statement Template
