Income statements as well as balance sheets, are the most basic and effective elements that would be required by potential lenders for review of your financial position.
Boc Hong’s in-come statement includes all of the major items in the list above, except for discontin-ued operations. 43 Illustration Illustration 4-2 presents an income statement for Boc Hong Company.Income Statement vs Balance SheetĪn income statement is a formula showing the cash flow of profits and expenses, also referred to as a Profit and Loss (“P&L”), whereas a balance sheet expresses asset amounts and liabilities. Chapter 4 Income Statement and Related Information It is quite important to format any income statement so that it will be appropriate to the business that is currently being conducted. They also may be used to determine any income tax liability. Income statements may also assist in tracking dramatic increases in product returns or the costs of goods that are sold as a percentage of sales. Specific items that could be causing unexpected expenditures can be located and controlled,such as phone expenses, mail, or even office supplies.
You would also use an income statement to assist in tracking income and expenses so that you would be able to determine how efficiently your business is performing over any period of time. Quarterly Income Statement Template Download Now This variant is largely the same as the one above, with the only notable difference being that the period it overlooks is for an entire quarter, making it a more comprehensive and lengthier document than its monthly counterpart.