Income statement example
An income statement, also known as a profit and loss statement, provides a summary of a company’s revenues, expenses, and net income or loss over a specific period of time, typically a quarter or a year. Here’s an example of a simplified income statement for a fictional company:
XYZ Company Income Statement for the Year Ended December 31, 20XX
Revenue:
Sales of Products $500,000
Service Revenue $150,000
Total Revenue $650,000
Expenses:
Cost of Goods Sold $250,000
Salaries and Wages $150,000
Rent Expense $40,000
Utilities Expense $15,000
Advertising Expense $20,000
Depreciation Expense $10,000
Interest Expense $5,000
Total Expenses $490,000
Net Income (Profit) $160,000
In this example:
Income statement example
- Revenue: This section lists all sources of income for the company. In this case, there are two sources: sales of products and service revenue. The total revenue is the sum of these two sources, which is $650,000.
- Expenses: This section lists various expenses incurred by the company during the specified period. Common expenses include the cost of goods sold (the cost to produce the products sold), salaries and wages, rent, utilities, advertising, depreciation, and interest. The total expenses are $490,000.
- Net Income (Profit): The net income is calculated by subtracting the total expenses from the total revenue. In this example, the net income is $160,000, which represents the profit earned by the company during the specified year.
This is a simplified example, and in a real-world income statement, there may be additional details, categories, and subtotals. Income statements are an essential financial tool for businesses as they provide insights into a company’s profitability and financial performance over a specific period. They are also used by investors, creditors, and analysts to assess a company’s financial health and make informed decisions.
