What is the purpose of the income statement?

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What is the income statement?
This statement, also called a profit and loss statement, is a type of financial report that explains and reflects in detail the expenses and income that a company had during a certain period of time.

Therefore, the income statement allows us to understand what the business is like at the operational level, the fixed and variable costs necessary to maintain sales, the capacity to generate sales, administrative expenses and debts that affect the company in a certain range of dates.

On the one hand, this financial statement provides information about the value of the company, data that is interesting for investors. And, on the other hand, it allows debtors to know how easy it is for the company to return their money.

That is, the analysis of an income statement explains the profitability of an organization and helps it make the right decisions for its growth and for establishing itself in the market.

Main accounts that make up the income statement
The income statement is made up of nine accounts that seek to answer benin telegram screening questions such as what the company sells, how much it is selling, how expenses are managed, the profits it is generating, and more.

Do you want to know what these accounts are? We explain them below:

1. Sales
The first piece of data found in an income statement is this one and it corresponds to all the income that a company has in a certain period that is being analyzed.

2. Costs of sales
It refers to the amount of money that the company had to pay for the product or service it offers: indirect labor, logistics costs, among others.


3. Gross profit
Because it is the difference between sales and the cost of sales, it indicates what the company is earning in gross terms with the product or service it offers.

4. Administrative or operating expenses
Expenses involved in the operation of the organization are included, such as: rental of premises, basic services, payroll without commissions, among others.

Marketing and advertising expenses are also included here.