Income Statement, aka Profit and Loss Statement (P&L)

 

About the Income Statement


The Income Statement compares your sales to your expenses.  By reviewing your income statement, you can evaluate how much you are earning and spending month-to-month so you can identify areas to cut back or expand.

Use the Income Statement report to:

  •  See how you are doing for the month, quarter, and year
  •  Make projections for future earnings
  •  Budget for future expenses

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Viewing the Income Statement


To view your Income Statement:

  1. Click the Reports tab.

  2. Under Financial Reports, click Income Statement.

  1. From the Date Range drop-down menu, choose the date range you want to see or create your own custom range by entering "From" and "To" dates and clicking "Refresh List." To see all entries from the beginning of your records, leave "From" blank. To see all entries with future dates, leave "To" blank.  More about dates

  2. (Optional) From the Compare Periods drop-down menu, choose a period, if you want to compare periods, within the date range you selected. For example, if you are showing results for the first quarter, you can choose to compare months within the first quarter.

  3. From the Report Format drop down menu, choose the report output option.

  • To view the report on screen, select On Screen Display

  • To print a summary version of the report, select PDF Summary

  • To print a detailed version of the report, select PDF Detail

  • To export the report to Microsoft® Excel, select Excel (XLS) Detail

  • To export the report to Open Office, select Open Office (XML) Detail

  1. Click Run Report.

When you see the report on the screen, you can:

  • Click Show All Accounts to expand the report to show all of your accounts and subaccounts, or click the [+] icon to expand a particular account.
  • Click Hide All Accounts to collapse the report to show only the account categories and subcategories, or click the [-] icon to collapse a particular account.
  • Click an account name to view the account activity for that account.

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Reading the Income Statement


The Income Statement is divided into four major categories: 

 

Category

Description

Accounts Involved

Above the Line

Revenue earned and Expenses incurred (COS) are commonly referred to as “above the line” items because they are what affect the profit of your business.

Generally, your COS reduces your taxable income so it is best to record all of your qualified expenses in your COS accounts as it make sense for your business and it falls within the law.

Revenue

COS

The Line

Gross Profit is “The Line” because it is what you have left over to work with once you pay for the goods or services you sold to generate the revenue. This figure is generally your taxable income.

Gross Profit

How it is figured:

Gross Profit = Revenue - COS

Below the Line

Expenses and other income are often referred to as “below the line” because they just feed off the gross profit, reducing the profit to what you finally scoop up in your “net” to keep.

Expenses

Other Expenses

Other Income

The Bottom Line

This is what you scooped up in your "net" to keep. This figure is transferred over to the balance sheet so you can track the amount you made or lost over the year.

Net Income

How it is figured:

Net Income = Gross Profit - Total Operating Expenses + Other Income - Other Expenses

A positive figure results in Net Profit; a negative figure results in a Net Loss.

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About dates in the Income Statement


To-date means the beginning of that period to the equivalent of today's date in that period.

Date range:

What it shows:

Example (assuming today’s date is August 6 and fiscal year starts January 1)

This Month-to-date

From the first day of the current month through today

August 1 - 6, 2008

This Quarter-to-date

From the first day of the current quarter through today

July 1 - August 6, 2008

This Fiscal Year-to-date

From the first day of the current fiscal year through today

January 1 - August 6, 2008

Last Month

 

From the first day through the last day of last month

July 1 – July 31, 2008

Last Quarter  

From the first day through the last day of last quarter

April 1 – June 30, 2008

Last Quarter-to-date

From the first day of last quarter through three months ago today

April 1 - May 6, 2008

Last Fiscal Year

From the first day through the last day of last fiscal year

Jan 1 – December 31, 2007

Last Fiscal Year-to-date

From the first day of last fiscal year through one year ago today

Jan 1 - August 6, 2007

Custom

 

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