When learning accounting funds, we can conclude that the statement of income statement is a report that provides business accounting accounting information to shareholders, government agencies, and other stakeholders. The accounting information contained in this statement is the result of operations, that is, profit or loss for the period. Profit statements are produced by an enterprise in different periods. Daily, monthly, annually, etc. This statement allows users to quickly obtain simplified and accurate knowledge of the entity's financial position. The profit and loss accounts can be compared to predict the progress of the business process, to assess the financial position for several accounting periods, and to predict the future development and development of the companies.
Generally, the statement of revenue has the following major parts:
- First Part – Total Revenue . This is the gross amount on which the goods were sold or services to the business customers. Gross means that the costs associated with such sales can not be deducted from the revenue number. It is important to understand that when the accrual accounting principle is applied, the income shown in the profit and loss account is not equal to the funds received from the buyer of the goods, that is, based on accrual accounting revenue, the sale of the goods sold to customers for goods sold or sold.
- Part Two – the cost of goods sold or the cost of services provided. This is a product cost sold to customers during the period for which a revenue statement was made or the cost to customers for the given period. These costs are attributed to the sales costs as they are directly related to the earned income.
- Third Part – Gross Profits. This is the difference between total revenue and sales costs
- Fourth Part – Operating Costs. These are the costs incurred during the period, which are also related to earning total revenue, but not directly. Generally, operating costs include administrative salaries, paid taxes, and other charges that are not directly related to the sale.
- Fifth Part – Operating Profit This is the difference between gross profits and operating costs. In the financial literature, operating profits are usually referred to as interest and tax avoidance.
The rest of the income statement depends on the particular business. If the business unit has loans, the income statement includes the interest costs shown on the operating profit included in the profit and loss account. If the business pays profitable and corporate taxes, these costs must also be included in the profit and loss account.
At the bottom of the profit and loss account, net income or increase in equity is incurred in the given accounting period. The net profit margin is the total revenue for the period and the costs incurred in obtaining this revenue.
Source by sbobet