How to make an income statement from a trial balance?
Understand the Problem
The question is asking how to prepare an income statement using the information provided in a trial balance. This involves identifying revenue and expense accounts from the trial balance and calculating the net income by subtracting total expenses from total revenues.
Answer
Print trial balance, determine total revenue, calculate COGS, compute gross profit, identify operating expenses, calculate net income.
To make an income statement from a trial balance: print the trial balance, determine total revenue, calculate cost of goods sold, compute gross profit, identify operating expenses, and finally, calculate net income.
Answer for screen readers
To make an income statement from a trial balance: print the trial balance, determine total revenue, calculate cost of goods sold, compute gross profit, identify operating expenses, and finally, calculate net income.
More Information
An income statement provides a snapshot of the company's financial performance over a specific period, summarizing revenue, expenses, and profits or losses.
Tips
Ensure all revenues and expenses are accurately recorded in the trial balance, and double-check that the trial balance is balanced before starting.
Sources
- LegalZoom - What is an income statement and how to make one - legalzoom.com
- FreshBooks - How To Prepare An Income Statement - freshbooks.com
- AccountingTools - How to prepare an income statement - accountingtools.com
