2. INCOME STATEMENT Also known as the P & L statement is the only financial statement that enables a business to look at its PROFIT over a period of time.

3. 5 Elements of Income 1. REVENUE The total amount of money earned by a business. This includes sales of goods or services, interest earned, ROI, and the sale of assets.

4. ELEMENTS OF INCOME 2. COST OF GOODS SOLD All costs to obtain or produce what the business sells.

5. Cost of Goods Sold Beginning Inventory___________ + Purchases ____________ = Total Merch. Aval. ____________ - Ending Inventory ____________ = COGS _______________

6. 3. GROSS PROFIT Is determined by subtracting COGS from REVENUE It is the amount left over before all other expenses have been paid

7. 4. OPERATING EXPENSES All other expenses associated with the business. Include: salaries, advertising, insurance, utilities, and rent. The business pays these expenses in order to operate and keeps its doors open

8. 5. NET INCOME The bottom line. The final profits after all expenses have been deducted.