Income Statement

An income statement is a summary of a company’s profit and loss over a specific time period. It is also known as a Profit &  Loss statement, or P&L.

It shows the income earned and expenses paid by a business over the period being reported. It  shows how well the business is doing by indicating what kind of sales were made, how many returns there were, what it costs to run the business, whether there were unexpected expenses, and what your income tax liability will be.

The simple income statement formula is Revenue-Cost of Goods Sold=Gross Margin (Gross Profit)-Operating Expenses=Net Income.

The P&L statement includes both variable (COGS) and fixed (operating expenses) costs. Net income is also known as the bottom line.

Most income statements calculate Earnings Per Share (EPS), which calculates how much each stockholder receives for each share they own if the company distributed the net income.

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About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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