About Income Statements
If you are considering bookkeeping and accountancy as prospective careers then you are probably aware that the job of bookkeepers and accountants is to record and analyze the financial transactions of a business. This involves everything from recording day-to-day expenses and revenue to creating reports which analyze and explain the information recorded. Usually bookkeepers focus more on the recording aspect, and accountants on the analyzing aspect. Even bookkeepers know how to issue the most basic of bookkeeping and accounting forms, the incomes statement. An income statement has three parts.
The first one is the revenue section. Revenue, also known as income, is the amount of money earned by a business during the reporting period by charging its customers for good or services. In the revenue section you list your revenue along with the total amount. Your reporting period could be a month, a year, or any time period desired. You may also include the worth of other assets on this list—things such as buildings, furniture and equipment. Although not income they contribute to your equity. The second section of the income statement is expenses. A business’s expenses can be many and this may be a long list. The kinds of things that count as expenses are bills, employee wages, maintenance and repairs, taxes, bank and professional fees and more. Anything you had to pay for in order to help keep your business running counts. Because income statements can look at your total assets, even the depreciation of furniture and equipment can act as an expense. The last part of a revenue statement is net worth. Net worth is whatever is left over when your expenses are subtracted from your income and assets. If it is a positive number then you have a net gain. If the number is negative then you have a net loss.
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