How to Make a Company Income Statement

In the world of business and commerce, the term profit and loss is familiar to the ears. The income statement in accounting is one of the important things in the accounting period. This article discusses the meaning of profit and loss, how to make an income statement, and examples of preparing an income statement.

Table of Contents

1 Definition of Income Statement

1.1 Purpose of Making an Income Statement

2 Main Elements of Making an Income Statement

2.1 1. Revenue

2.2 2. Expenses

2.3 3. Profit (Profit)

2.4 4. Loss

3 Various Profits in the Income Statement

4 Preparation to Prepare an Income Statement

5 Examples of Formats for Making Profit and Loss for Service and Trading Companies

5.1 Single Step

5.2 Multistep

Table of Contents

Definition of Income Statement

An income statement or profit and loss statement is a part of a company’s financial statements for a certain accounting period, which contains the company’s income and expenses, which results in a net profit / loss.

The income statement consists of income during the current period and expenses, both operating and non-operating expenses during the current period.

Purpose of Making an Income Statement

Calculation of the company tax amount.
Check and evaluate earnings at any time.
Assessing company efficiency based on business value.

Note: Find out more about the income statement with the following journal articles: Terms of the Trading Company Income Statement & Preparing the Trading Company Income Statement

Main Elements in Making an Income Statement

1. Revenue

Revenue is an increase in the company’s assets or inflows from operational activities.

Total Gross Revenue – Discounts or Discounts, Returns, Other Benefits

2. Expenses ( Expenses )

Expenses are the use of assets or cash flow or the appearance of liabilities (liabilities) in a period due to the production of goods or delivery.

3. Profit ( Profit)

Profit is the increase in equity as a result of transactions or investments of owners or income.

4. Loss

Loss is a decrease in equity due to transactions or expenses as well as distribution to owners.

Various Profits in the Income Statement

Gross profit	A measure of direct revenue from company sales in an accounting period.
Operating profit	Difference in sales, costs and operating expenses of the company.
Profit before tax	Profit before income tax based on SAK.
Net profit	Net sales against COGS less operating expenses and income tax.
Current Operating Profit	Business activities in the current period after taxes and interest. Also called profit before extraordinary items.

Preparation to Prepare an Income Statement

The first step is to create a transaction journal. When linked with profit or loss, the sequence is: income, expense and derivative accounts.

Then posted to the ledger.
In the accounting cycle, the income statement is prepared after the trial balance and adjusting entries, or after work sheet or working paper preparation.
This is because to make a profit and loss, there are columns that come from working papers. Such as income and expenses in working papers.

Ketahui Format Laba Rugi: Identitas Perusahaan, Jenis Laporan yang Disajikan (Laporan Laba-Rugi) dan Periode, 3 Komponen Utama: Total pendapatan, Total beban dan Laba atau Rugi

Expenses are taken from the balance sheet, while profit and loss is the difference between total income and total expenses.
When income is greater than expenses, there will be profit. While total income is less than expenses, then it is a loss.

Example of Making Profit and Loss Format for Service and Trading Companies

· Single Step

Total income and profits and operating activities are placed at the beginning of profit or loss. Then followed by expenses and losses in operational activities.

Operating profit = Difference between Income and Total Profits and Expenses and Losses

Here’s an example of making a service company income statement using the single step method .

PT Jasa Sejahtera

Income statement

March 2020 period

Income
Net sales	IDR 800,000,000
Rental Income	IDR 20,000,000
Total income		IDR 780,000,000
Load
Cost of goods sold	IDR 300,000,000
Selling expenses	IDR 15,000,000
Administrative Expenses	IDR 10,000,000
Interest expense	IDR 5,000,000
Other Expenses Net	IDR 5,000,000
Total Expenses		IDR 335,000,000
Profit before tax		IDR445,000,000
Tax		IDR111,150,000
Net profit		IDR 333,750,000

· Multistep

There is a separation between operational and non-operational transactions. Then compare costs and expenses with income.

Operating profit = Visible Differences in Ordinary and Unusual (Incidental) Activities

The following is an example of making an income statement for a trading company using the multistep method

PT Dagang Sejahtera

Income statement

April 2020 period

Sales revenue
Net sales		IDR 800,000,000
Sales Returns and Price Reductions		IDR 40,000,000
Sales Discounts		IDR 20,000,000
Net Sales Revenue		IDR 740,000,000
Cost of goods sold
Initial inventory	IDR 15,000,000
Purchase	IDR 300,000,000
Bankrupt Burden	IDR 10,000,000
Goods Available for Sale	IDR 325,000,000
Ending Inventory	IDR 25,000,000
Cost of goods sold		IDR 300,000,000
Operating profit		IDR440,000,000
Operating Expenses
Selling expenses
Sales Salary	IDR 5,000,000
Advertising expenses	IDR 5,000,000
advanced
Other Selling Expenses	IDR 5,000,000
General Administration Expenses
Employee Salaries and Office Parts	IDR 10,000,000
Insurance Expense	Rp1,000,000
Depreciation and Amortization Expenses	IDR 4,000,000
Uncollectible Accounts Expense	IDR 2,000,000
Other General Expenses	IDR 3,000,000
Total Administrative Expenses		IDR 35,000,000
Operating profit		IDR 405,000,000
Other Income and Benefits
Interest income		IDR 15,000,000
Gain on Sale of Investments		IDR 20,000,000
Other Expenses and Losses
Interest expense		IDR 5,000,000
Losses on Sale of Equipment		IDR 20,000,000
Profit Before Income Tax		IDR 433,000,000
Income tax		Rp108,250,000
Net profit		IDR 324,750,000

That is the discussion on how to make an income statement for companies that needs to be known. To make it easier, you can use journal accounting and financial software .

Journals can list individual transactions and the total money you earned (income) and money spent (expenses).

The following is an example of an income statement in the Journal:

In addition, the Journal also provides other reports such as balance sheets, cash flow, and other features such as bank reconciliation summaries, changes in equity and automated trial balances. Looking for accounting software that saves business processes? Only the answer journal.