An income statement typically includes the following types of accounts:
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Revenue (Sales): The total income generated from normal business operations, such as the sale of goods or services.
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Cost of Goods Sold (COGS): The direct costs attributable to the production of the goods sold by a company, including materials and labor.
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Gross Profit: Calculated as Revenue minus COGS.
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Operating Expenses: These are the costs required to run the company that are not directly tied to the production of goods or services. This includes:
- Selling Expenses
- Administrative Expenses
- Depreciation and Amortization
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Operating Income: Calculated as Gross Profit minus Operating Expenses.
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Other Income and Expenses: This can include items such as interest income, interest expense, and gains or losses on the sale of assets.
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Income Before Tax: The total income before taxes are deducted, calculated by adding or subtracting Other Income and Expenses from Operating Income.
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Income Tax Expense: Taxes owed based on the taxable income of the business.
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Net Income: The final profit or loss of the company after all expenses, including taxes, have been deducted from total revenue.
These accounts together provide a comprehensive view of a company’s financial performance over a specific period.