What goes on an income statement template?
An income statement, otherwise known as a profit and loss (P&L), is a record that measures and shows all the revenues and expenses a company incurred during a specific period of time. The income statement helps determine a company’s financial health and the financial progress it made during a particular period. The income statement contains sections for revenue and expenses, which include net sales, gross profit, cost of goods sold, selling expenses, general and administrative expenses, and net profit. The income statement should be prepared and reviewed monthly to evaluate performance and make adjustments as needed to stay on track with financial budgets and goals.
A simple income statement template can help you create this financial document with information from your own company’s finances.
What is the income statement used for?
The income statement or profit and loss is used both internally and externally for different purposes. Internally, the income statement can be viewed at the corporate level, department level, product level or even customer level. By evaluating the income statement at each level, the company can gain insightful understanding of how profitable a product, customer relationship or department is and adjust as needed.
The income statement is considered one of the most important financial statements due to the amount of information that can be pulled out of it. Externally, the income statement is used by investors, creditors, and stakeholders to understand how the company is making money and how they are allocating the revenue. The income statement acts as the first impression to investors and creditors as a proof of business success or failure.
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