How To Prepare Income Statement For Service Company

The income statement of your company may be a little more complex and contain more line items.

How to prepare income statement for service company. This method is suitable for service providing businesses. The income statement summarizes the results of a firm. We will be using the adjusted trial balance from this lesson. To prepare an income statement generate a trial balance report calculate your revenue determine the cost of goods sold calculate the gross margin include operating expenses calculate your income include income taxes calculate net income and lastly finalize your income statement with business details and the reporting period.

The table below shows an example of a very simplified income statement. List all your revenue and expenses in separate. In this tutorial we will prepare an income statement of a sole proprietorship service type business using information from previous lessons. The statement covers the company s financial performance for a given period a month quarter or even year.

This method is really simple and quick to know about how good or bad your business is doing. How to prepare an income statement for a service organization. This statement should serve to give you the basic layout and an idea of how a profit loss statement or income statement works. Therefore the income statement will be a basic breakdown of income and expenses.

In this video video you will learn how to build an income statement in excel with data for any company. Since service based companies do not sell a product the income statement will not contain cost of goods sold. Adjusted trial balance if you want you may take a look at how an income statement looks like here before we proceed. There are two methods you can use when preparing an income statement manually.

Methods of creating an income statement. When you re ready let s begin. Like all businesses one of the main financial statements a service company will prepare is the income statement.