Income Statement For A Service Company

Service companies have the most basic income statement of all the types of companies.

Income statement for a service company. A merchandising company engages in the purchase and resale of tangible goods. Therefore the income statement will be a basic breakdown of income and expenses. Let us name the company strauss printing services all amounts are assumed and simplified for illustration purposes. Then subtract all operating expenses.

Like all businesses one of the main financial statements a service company will prepare is the income statement. It is an essential tool when looking to define the company s sales its direct costs its indirect costs in addition to its gross profit and net profit. Since service based companies do not sell a product the income statement will not contain cost of goods sold. Service companies primarily sell services rather than tangible goods.

While income statements vary. Here is a sample income statement of a service type sole proprietorship business. The nature of increases or decreases in net revenue for each type of company is. The statement covers the company s financial performance for a given period a month quarter or even year.

If you look at an income statement for a service company you will not see a line item for the cost of goods sold. How to prepare an income statement for a service organization.