If you happen to be a new person who works as an accountant, you might still have to learn about generating income statement. Surely, you have already gained some knowledge related to the theories of all financial statements. But the reality that you face on the working place is surely different. Let’s begin by putting the header at the top of the statement in which it should contain the name of the company and the time length of the written income statement.
Then, create at least three columns for item, debits and credits after you jump for two lines from the header. The first thing that you need to write on the first list is the revenues which are made by the company that you are working at the moment. What you should write down on revenues include:
- Sales discounts subtracted
Expenses will be the next thing that you should put down on a list. Yet, it should be noted that there are various kinds of expenses that you have to use for the whole time period on the income statement. What you should write down on expenses include:
- Advertising, etc. including entertainment
When you subtract the credit amount with the debit amount, then you can find out whether the result is negative or positive. When it is positive, you can put the final number on the end of the row and make sure that you write net cash profit. On the other hand, put down net cash loss when the result is negative. The main aspect that you should keep in mind is that the income statement should represent transactions on certain time period as it links a lot with company’s balance sheet representing each transaction in the company.
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