Simple Accounting Income Statement Format

Operating income gross profit total operating expenses income before tax operating income other revenues and expenses net income income before tax income tax.

Simple accounting income statement format. This format is less useful of external users because they can t calculate many efficiency and profitability ratios with this limited data. The simple pro forma income statement is based on certain present assumptions and projections. At the bottom of this page you ll find a link to our income statement quiz 10 multiple choice questions which you can use to test yourself. Sales or revenue section presents sales discounts allowances returns and other related information.

Cost of goods sold section. Income statement format 1. Income revenue expenses what is an income statement used for. Its purpose is to arrive at the net amount of sales revenue.

Unlike the balance sheet that looks at a particular time period the purpose of an income statement is to see how much a business earned and spent in a specific accounting period. Pro forma is latin meaning for the sake of form which in this case means provided as a standard courtesy. There are two income statement formats that are generally prepared. These statements provide a what if account of the company to shareholders and other investors.

At its most simple the calculation for an income statement is. Income statement is prepared on the accruals basis of accounting. This means that income including revenue is recognized when it is earned rather than when receipts are realized although in many instances income may be earned and received in the same accounting period.