Examples Of Income Statement

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The Income Statement According to R.N Carter: “A profit and loss account is an account into which all gains and losses are collected in order to ascertain the excess of gains over the losses or vice versa.” Put alternatively, an Income Statement can be referred to as a financial statement which shows the financial position of an organization which are mainly used by stakeholders. It is usually prepared and published at the end of an accounting period so as to take into account all the transaction occurred from the start of the year. Thus, it helps to keep shareholders and managers updated about the costs, revenues and expenses incurred by the business within its financial year. Figures like turnover, cost of sales, gross profit and net profit can be calculated through the Income Statement. Turnover, also known as net sales, is the amount that a business earns directly…show more content…
It is obtained by adding the opening inventory to the cost of purchasing goods and deducting the cost of goods in closing inventory. Figures such as the cost of transportation of goods and return outwards of goods should also be considered by subtracting it from purchases. The cost of sales is a key part of the performance metrics of a company, since it measures the ability of an entity to design, source, and manufacture goods at a reasonable cost. Gross Profit is the profit that a business makes directly from its sales before deducting non-operating expenses. It is obtained by deducting the Cost of Sales from the Turnover. It indicates the efficiency of the management in using labor and supplies in the production process. Net Profit is the last section of the income statement. It shows the true profit of a business and it is obtained by subtracting all non-operating Expenses of the business from the Gross Profit, where non-operating expenses are costs that are not directly related to its main
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