Income statement
In Arabic قائمة الدخل
A report of revenue, costs and expenses over a period, showing gross profit and net income; also called the profit and loss statement.
In plain words
It answers whether the business made money over a month, quarter or year. For a distributor, gross profit after the cost of goods sold matters as much as the bottom line, because it shows whether prices cover what the stock cost.
Revenue comes first, less the cost of goods sold to give gross profit, then operating expenses such as salaries, rent and vehicles to give net income. Each figure is the movement on its accounts within the dates chosen.
The common mistake is reading a period that includes the year-end closing journal. That journal empties revenue and expense accounts into retained earnings, so the year appears to have earned nothing.
- Revenue
- SAR 480,000
- Cost of goods sold
- − SAR 360,000
- Gross profit
- SAR 120,000
- Operating expenses
- − SAR 85,000
- Net income
- SAR 35,000
In Axon Suite
How Axon Suite handles it
Axon Suite reads the income statement from the posted ledger for any date range: revenue, cost of goods sold and expenses, with gross profit and net income beneath. The year-end closing journal is left out, so a closed year still reads.
Feature
Trial balance, P&L and balance sheet
The trial balance, income statement and balance sheet read straight from the posted ledger. Each parent account totals the accounts beneath it, and the balance sheet tells you whether it balances.
Open: Trial balance, P&L and balance sheet