An income statement records your business’s revenues both sales and gains and any expenses like salaries, cost of goods sold or mortgage. Adding up all these figures can either reveal that your business is acting profitably and contributing to a net income or that your business is not acting profitably and contributing to a net loss.
For example…
Smooth Tiles incomes statement revealed that the company made a net income of $100,000. This figure suggests that tiles are all the rage at the moment, and the business’ revenues through all channels of sales such as wholesale and retail is greater than any expenses the company incurred. So, even though Smooth Tiles took out a bank loan of $400,000, the sales figures and asset sales like the fleet of old company cars they sold added up to reveal a profit in the income statement.
