Income Statement Template: 40+ Templates to Track your Company Revenues and Expenses - Template Sumo (2024)

An income statement is one amongst the three important financial statements, used as constituents for depicting a company’s performance during a particular financial period. Also termed as the profit and loss statement, an income statement focuses on accounting the revenues and expenses of the company during the said financial period.

Quite simply, an income statement focuses on tracking all the revenues and expenses generated by the company. An income statement starts by establishing the details of the sales performed. By combining the sales to the generated revenues and expenses, the income statement goes on to calculate the net income and finally, the earnings per share of the company.

In a summary, an income statement gives an account of how the net revenue of a company is transformed into net earnings.

Types of Income Statements

Annual Income Statement Template

Annual income statements are used when a person is analyzing the financial information of the company for a period which comprises of a year.

Apart from this, there are income statements which can help you to calculate the net income of the company and compare the results with that of the previous or succeeding years to get a rough idea of how your company has been functioning over the period of years. With the help of such income statement templates, you can easily calculate and get the year-over-year analysis.

Template for an annual income statement is given below:

Company Name

Income Statment For The Year Ended on…

Particulars Amount

Revenue

Revenue Stream 1 xxxx

Revenue Stream 2 xxxx

Any other forms of Returns, Discounts etc. xxxx

Total Revenue xxxx

Expenses

Cost of Goods Sold xxxx

Advertising xxxx

Depreciation xxxx

Insurance xxxx

Maintenance xxxx

Salaries xxxx

Wages xxxx

Stationery xxxx

Travel xxxx

Other Expenses xxxx

Total Expenses xxxx

Pre-Tax Income xxxx

Income Tax xxxx

Net Profit/Loss xxxx

Monthly Income Statement Template

There are numerous businesses around the world who require a more detailed form of income statement reporting. Due to this, they choose to roll-up and create an income statement on a monthly basis. At the end of the year, this monthly data is rolled up and compiled to form the annual income statement.

Since, a monthly income statement shows data on numerous basis such as bi-monthly, quarterly, bi-annually, seasonally or even on the month-over-month basis, any and all trends which occur in the business can be easily analyzed. Apart from this, a monthly income does not differentiate between companies of varying sizes. It can be used by both small as well as large and multi-departmental companies.

The template for preparing a monthly income statement is given below:

Company Name

Income Statment For The Month Ended on…

Particulars Amount

Revenue

Revenue Stream 1 xxxxx

Revenue Stream 2 xxxxx

Any forms of Returns and Discounts etc. xxxxx

Total Revenue xxxxx

Expenses

Cost of Goods Sold xxxxx

Advertising xxxxx

Depreciation xxxxx

Insurance xxxxx

Maintenance xxxxx

Salaries xxxxx

Wages xxxxx

Stationery xxxxx

Travel xxxxx

Other Expenses xxxxx

Total Expenses xxxxx

Pre-Tax Income xxxxx

Income Tax xxxxx

Net Profit/Loss xxxxx

Real Estate Income Statement Template

Income Statements are created for people to analyze how a particular business is functioning. Even in cases of investing, people take a look at the financials before they decide if a particular investment is worth investing or not.

Such is the case with real estate investment as well. While investing in real estate, investors tend to check the income statement before they finalize the deals. Apart from this, the investors also require an income statement to know the returns which have been provided by the investment property in the past years.

Due to this, it is very important to create an income statement for real estate as well. A real estate income statement template has been given below:

Property or Corporation Name

Proforma Income Statement For the Period of the Year Ended…

Particulars Amount

Income

Gross Rent or Scheduled Income xxxxx

Less: Vacancy Amount (x%) (xxxxx)

Total Revenue or Gross Operating Income xxxxx

Expenses

Property Management Fees (x% of the Scheduled Income) xxxxx

Property Tax xxxxx

Insurance xxxxx

Repairs and Maintenance (x% of Scheduled Income) xxxxx

Utilities xxxxx

Other Expenses xxxxx

Total Operating Expenses (xxxxx)

Net Operating Income xxxxx

Less: Debt Service (xxxxx)

Income Tax xxxxx

Net Profit/Loss xxxxx

Since income statements for real estate are a bit different from traditional income statements, here is an explanation for a few unknown terms:

1. Gross Income – This is the amount which is supposed to be received as the rental income.
2. Vacancy Amount – During several months of the year, there are properties which sit idle because of being vacant. A vacancy amount is hence used to get a more realistic value of the rent received.
3. Debt Service – The debt service refers to the amount of the money to be paid for the debt or mortgage accumulated on the property.

Accrual Basis Income Statement Template

The accrual basis of accounting reports revenues on the income and expense template when they are earned. Even when the company earns their revenues but they do not receive the actual cash, the asset accounts which are supposed to receive the amount will be recorded. This is known as an accrual basis of reporting income statements.

Under the accrual basis of accounting, expenses are reported when the income statements match up with the revenues being reported. Even when the expenses occur but they are not paid, the liability accounts are recorded.

Therefore, the accrual basis of accounting does not focus on the receipt or payment of cash. It focuses on:

1. The revenues that are being earned by the company.
2. the expenses are being incurred by the company.

A lot of companies have adopted the accrual basis of creating an income statement. With the help of the accrual basis of accounting, they can get a more accurate measure of how the company is functioning during an accounting period. Also, the company can give a more accurate representation of the asset and liability holdings at the end of the accounting period.

The income statement created on an accrual basis isn’t quite as different from the ones created on a cash basis. An example of the same is given below:

Company Name

Income Statement For the Year Ended…

Particulars Amount

Revenue

Revenue Stream 1 xxxxx

Any forms of Returns and Discounts etc. xxxxx

Total Revenue xxxxx

Expenses

Cost of Goods Sold xxxxx

Advertising xxxxx

Distribution xxxxx

Administrative Expenses xxxxx

Maintenance xxxxx

Salaries xxxxx

Finance Charges xxxxx

Stationery xxxxx

Other Expenses xxxxx

Total Expenses xxxxx

Pre-Tax Incomexxxxx

Income Tax (xxxxx)

Net Profit/Loss xxxxx

Construction Company Income Statement Template

Like other companies, a construction company to requires a profit and loss statement to keep a track of how their company is performing. A construction company, too, formulates an income statement similar to other companies. The only area where it differentiates from other companies are the particulars which are quite different from other companies.

Apart from this, the income statement of a construction company also contains two independent sections for the direct and indirect expenses which are generated by the company during the financial year.

To make it clearer, a construction company income statement template is given below:

Company Name

Income Statement For the Year Ended…

Particulars Amount

Revenue

Revenue from Contracts xxxxx

Add: Change in Orders xxxxx

Add: Allowances xxxxx

Add: Interest Earned on Contract Revenues xxxxx

Total Construction Revenue xxxxx

Direct Expenses

Land xxxxx

Materials xxxxx

Labour Charges xxxxx

Other Charges xxxxx

Total Direct Expenses xxxxx

Indirect Expenses

Management xxxxx

Payroll Taxes and Benefits xxxxx

Transportation xxxxx

Communications xxxxx

Insurance xxxxx

Equipment xxxxx

Communications xxxxx

Tooling xxxxx

Supplies xxxxx

Total Indirect Expenses xxxxx

Overheads

Office Rent xxxxx

Storage Expenses xxxxx

Marketing xxxxx

Utilities xxxxx

Administrative Expenses xxxxx

Other Expenses xxxxx

Total Overhead Expenses xxxxx

Total Expenses xxxxx

Pre-Tax Income xxxxx

Less: Income Tax xxxxx

Net Profit/Loss xxxxx

Detailed Information on Income Statement Template

On the basis of their components, income statements can be created in two formats:

1. Single-Step Statements – In single-step income statements, there is no inclusion of sub-totals or grouping of similar expenses such as gross profit, operating income etc.
2. Multi-Step Statements – On the other hand, multi-step statements are those in which similar expenses are grouped together. Grouping such expenses help to generate figures such as gross profit, operating income etc.
   

The Main Components of an Income Statement

The main components which appear in each and every typical income statement are:

1. Revenue – Revenue is the primary aspect of an income statement. It is brought down from the trial balance to display the amount earned by the company by providing their products or services.
2. The Operating Expenses – Operating expenses simply refer to the costs involved in operating or running the numerous functions of a company. These expenses are generated as a result of selling, distribution and administrative expenses etc. A few examples of operating expenses include office rent, stationery expenses etc.
3. The Operating Profit – These profits are a result of the profits generated after the cost of the sales and all other such operating expenses are charged to the revenue. These profits are calculated before any adjustments are made for interest or investment income or taxes.
4. The Cost of Sales – The cost of sales refers to the costs incurred by the company for the goods sold or services provided by them. It is the aggregate of all the costs which arise during manufacturing or procuring goods or services provided.
5. Gross Profit – The gross profit derived shows the profit earned by the goods and services before the company accounts for the selling expenses, administrative expenses or the finance costs. Gross Profit can be calculated with the formula:

Gross Profit = Revenue – Cost of Sales

6. Income from Continuing Operations – The income from continuing operations are representative of the after-tax incomes which have been generated by the company from business components which are intended by the company to be owned in the future.
7. Income from Discontinued Operations – These incomes refer to the after-tax incomes generated from business components which have been disposed by the company in the midst of the financial year or they have been intended to be put up for sale at the year-end.
8. Net Income – The net income represents the incomes which have been generated by the company from continued as well as discontinued operations. The net income represents the income earned by the company after accounting for all the expenses.

Formulating an Income Statement

Creating an income statement is not as hard as most people perceive it to be. Irrelevant of the fact whether you’re creating a single-step income statement or a multi-step income statement, there are a few steps which you need to compulsorily follow for creating the income statement.

These steps are:

1. Bring the trial balance down – This is the most important factor for creating an income statement. First of all, you need to formulate and bring down the trial balance from the general ledger.
2. Find the revenue amount – Find the total of all the items which bring revenue into the company by totaling them on the trial balance and inserting the result into the income statement.
3. Aggregate the cost of goods sold – Similarly, find out the total of the cost of goods sold by totaling the cost of goods sold in the trial balance and placing the result into the income statement. The cost of goods sold is placed directly below the revenue amount.
4. Calculate the Gross Margin – The gross margin is calculated with the help of subtracting the cost of goods sold from the revenue figures. Determine this value to find out the gross amount earned on selling your products and services.
5. Find the Operating Expenses – The total of all expense line items and the cost of goods sold helps in accounting the operating expenses incurred by the company during the financial year. Compute this value and insert it below the cost of goods sold in the trial balance and insert it in the selling and administrative expenses in the income statement.
6. Compute the Pre-Tax Income – In this step, subtract the selling and administrative expenses total from the gross margin and find out the pre-tax income. Enter this value at the bottom of the income statement.
7. Compute the Income Tax – Compute the income tax by multiplying the applicable income tax rate with the pre-tax income value. This can help you to generate the income tax expense. Enter this amount below the pre-tax income and record this value with the help of journal entries.
8. Calculate the Net Income – To calculate the net income, subtract the income tax from the pre-tax income earlier generated. Enter this amount into the last line of the income statement name it as the net income figure.

Format of Single-Step Statements

Single-step statements are one of the two formats of creating of an income statement. In this format, all the expenses incurred, such as the cost of goods sold, are included in one single column. In other words, single-step statements do not break the expenses out in numerous categories. All the expenses are listed together following which their total value is calculated.

A lot of companies use single-step statements for their sheer simplicity. It is quite simple to be understood as well as prepared. However, due to this simplicity, the statements become incapable of giving people, outside the company, a lot of details regarding the company operations.

The format for writing a single-step statement is:

Name of Company/Organization

Income Statement

For the year ended…

Total Revenue

Less: Total Expenses

——————————-

Net Income

——————————-

A few examples of the expenses included are the cost of goods sold, advertising, depreciation of company assets such as Machinery, Wages, Supplies etc.

The single-step statement method is heavily utilized by companies and firms as it helps readers to easily summarize all the information given within the income statement. However, there is no depiction of complex sub-totals such as gross margin calculation or expenses which are broken down department by department. Due to this reason, single-step statements are not utilized in larger and multi-departmental firms and organizations.

A better way of utilizing these statements is to adopt them in smaller companies, who can then switch over to the multi-step statement once their businesses grow in size and complexities.

Format of Multi-Step Statements

Multi-step statements work in complete opposition to single-step income statements. This is because these statements function with the help of multiple totaling elements to finally compute the net income.

Unlike simple-step statements, a multi-step statement works by segregating and differentiating the numerous constituents such as non-operating revenues, gains, losses etc. After differentiating, the statements adds their gross total. Finally, all these gross totals are added to calculate the net income.

The format of multi-step income statements are:

Name of Company/Organization

Income Statement

For the year ended…

Revenue

Less: Operating Expenses

Add: Other Incomes

—————————————-

Net Income

—————————————-

The Revenue section includes sales and the cost of goods sold.

The Operating Expenses section includes advertising, depreciation, rent, salaries, wages, supplies etc.

The Other Incomes section is constituent of the interest expense, interest income etc.

As the multi-step income statement has a higher level of information content, it is generally preferred over the single-step format.

The Formula of an Income Statement

The basic formula or equation which is used to derive the net income from an income statement is:

Net Income = Total Revenue – Total Expenses

What is The Main Purpose of Using an Income Statement

Companies, organization, firms and all other forms of business like to keep an eye over how their business is functioning. Without a doubt, the owners and investors like to keep their company profitable. With the help of an income statement, companies are able to know about the revenues and expenses which are occurring in their company.

However, reading and understanding an income statement is not limited only within the company itself. Any person who shows an interest in investing, picking stocks or simply enquiring about the financial health of a company should know how to summarize the information gathered from an income statement.

With the help of an income statement, the owners can analyze the operations going on in the company during the financial year. As the income statement can help the company to know whether it is making a profit or a loss, it is also known as a profit-and-loss statement.

With the help of the statement, the managers can how if a business is performing well or not and accordingly, determine the course of action to be taken in the future. If the company is not performing well, the managers know that it is time to make changes and prevent the company from going out of business.

However, the purpose of an income statement also depends upon the user or business owner managing the company or the organization. For example, for an investor, the purpose of the income statement would be to determine the consistent profits so that he can continue on the course of his business without any worry. On the other hand, a lender using an income statement is more interested in the profits generated by the business so that he can sufficiently pay for the interest expenses generated by him for the loaned amount.

How To Calculate Expenses from an Income Statement

There are two methods in which losses can be calculated from an income statement. These include:

1. Expenses Generated from Primary Activities – All the expenses which are generated from the primary activities of the company or firm are listed under this column. These could be the expenses incurred from the normal operating revenue from business activities. A few of these expenses include:
2. Cost of goods sold
3. Selling
4. General Expenses
5. Administrative Expenses
6. Depreciation of Assets
7. Research
8. Development
9. Expenses Generated from Secondary Activities – These are the expenses which are generated from secondary activities. Secondary activities include all the expenses which are linked to non-core activities. A few of these expenses include:
10. Interest Paid on Loan
11. Tax Paid