Bookkeeping For Dummies, 2nd Edition

Chapter 19

Producing an Income Statement

In This Chapter

Sorting out the elements of an income statement

Preparing the statement

Analyzing statement data

Zeroing in on profitability

Without one very important financial report tool, you’d never know for sure whether or not your business made a profit. This tool is called the income statement, and most businesses prepare them on a monthly basis as well as quarterly and annually in order to get periodic pictures of how well the business is doing financially.

Analyzing the income statement and the details behind it can reveal lots of useful information to help you make decisions for improving your profits and business overall. This chapter covers the parts of an income statement, how you develop one, and examples of how you can use it to make business decisions.

What Is an Income Statement?

Did your business make any money? You can find the answer in your income statement, the financial report that summarizes all the sales activities, costs of producing or buying the products or services sold, and expenses incurred in order to run the ...