1. Income Statements

2. Say you’re looking to buy a business Why would you want to see the balance sheet? –Assets –Liabilities –Equity What doesn’t the balance sheet tell you? –Income –Profit/Loss

3. Income Statement Income Statement - a financial statement that summarizes revenues and expense, and shows the net income or net loss for a given period of time

4. Heading Revenue Types of Revenue Expense Types of Expense Total Expense Revenue - Expense

5. Why Use an Income Statement? Owners want to know if they’re making a profit Investors or Bankers want to know whether to invest or loan money To pay taxes a business must know profit/loss

6. Fiscal Period Earnings (profit/loss) are measure over a specific period of time Sometimes referred to as the accounting period The fiscal year is not always the calendar year (most aren’t) but it is twelve(12) consecutive months

7. Shorter Fiscal Periods Quarters – the year is broken into four(4) equal parts –If you watch/read/listen to business news you will often hear business reporting on their quarterly earnings (investors like to know these things so they know if their money is working for them) Weeks – close reporting

8. Work Handout: