Starting a Business All-in-One For Dummies, 3rd Edition
by Eric Tyson, Bob Nelson, The Experts at Dummies
Chapter 2
Reporting Profit or Loss in the Income Statement
IN THIS CHAPTER
Looking at typical income statements
Being an active reader of income statements
Asking about the substance of profit
Handling out-of-the-ordinary gains and losses in an income statement
Correcting misconceptions about profit
This chapter lifts up the hood and explains how the profit engine runs. Making a profit is the main financial goal of a business. (Not-for-profit organizations and government entities don’t aim to make profit, but they should break even and avoid a deficit.) Accountants are the profit scorekeepers in the business world and are tasked with measuring the most important financial number of a business. Fair warning, though: Measuring profit is a challenge in most situations because determining the correct amounts for revenue and expenses (and for special gains and losses, if any) is no walk in the park.