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Sample Income Statement

Sample Income Statement Introduction

The income statement represents the flow of business activity for a particular accounting period, for example a month, a quarter, or a year. This flow of business activity is categorized into revenue and expenses, which determines net income.

The income statement is mainly known for getting to the bottom line: net income. But the income statement format also provides a valuable source for measuring different levels of income as listed below, spotting trends, understanding the strengths and potential weak spots of your business, and measuring the efficiency of operations.

Sunny Sunglasses Shop produced the below income statement for the accounting period of 2007.

Sample Income Statement
Sunny Sunglasses Shop
Income Statement
For the Year Ending
December 31, 2007

From this income statement example we can see the flow of business activity for one year with the bottom line result or net income.

The result of all operations after revenues and expenses is a net profit of $15,283. This is profit that directly builds the value, or equity, of the business! See why with accounting formulas here.

The company is off to a good start. But net income does not necessarily translate into cash flow under the accrual accounting method since sales and income on credit do not represent actual cash flow for the period.

It is therefore essential that other aspects of the business, such as debt management and cash flow, remain healthy with net profits. The financial statements, used together, provide information for all these aspects of the business.

Sample Income Statement

Sample Income Statement Introduction

The Income Statement Format

Gross Profit Margin

Operating Profit Margin

Net Profit Margin

Income Statement Example: Preparing Income Statements

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