Can you walk me through an Income Statement step by step?

As regards income statement or profit/loss statement, the first concerns are the steps below;

1. the obtention of the gross profit.
2. deduction of the operational expenses from the gross profit
3. profit before tax 

Secondly, Net profit after taxes.

Thanks for invitation,

Income statement is prepared as following:

Sales (-).Cost of Goods Sold =.Gross Profit (-)Selling & Administrative Expense (-) Depreciation =Operating Profit (EBIT) (-)Interest =.Earnings Before Taxes (EBT) (-)Taxes  = Earnings Available to Common Shareholders (-)Dividends or Owner Draw =Net Income

Income Statement varies from company to company, depending upon the size of operations. But the steps which every company have to follow according to IAS Framework is as follows:

Sales

(Cost of Sales)

Gross Profit

(Operating Expenses)

Operating Profit

(Admin Expenses)

PBIT (Profit Befor Interest and Tax)

(Finance Expenses/Interest Expenses)

(Tax Payable)

Net Profit

After this another portion is there which is known as Other Comprehensive Income, according to the IFRS this portion include those elements which do not qualify directly for the income as these are not the core operation of the business.

Sales XXX -Cost of Goods Sale Opening Inventory xx +Purchases xx -Closing Inventory (xx) (XXX) Gross profit XXX -Operating Expenses (XX) - Administrative Expenses (XX) PBIT(profit befor interest and tax) XX - Interest/ Finance charges (X) PBT (profit befor tax) XX - Tax Expense (X) Net Profit/Net Loss XX/(XX)

Step by Step Income Statement:-

1) Determine revenue account

2) Determine cost of goods sold

3) calculate gross margin

4) Determine operating  and selling & distribution expenses

5) calculate EBITDA

6) Deduct Interest, Depreciation and income tax

7) Calcualte net income

Revenues                   xxxxxxx

Cost of Sales               (xxxxx)

Gross Profit                  xxxxx

Selling &

 distributiun Expenses  (xxxx)

General &           

Administrative Expenses(xxxx)

Operating Income          xxxxx

Finance Charges           (xxx)

Share of Loss in case

of Subsidiaries             (xxx)

Gain on sale of

Property & Equipment  xxxx

Other Income              xxxx

Income before Tax &

Interest                     xxxxx

Interest                     (xxx)

Income before Tax      xxxx

Tax                            (xxx)

Net Income                xxxx     

Step-by -Step Income Statement :  

        Direct Income                     XXXX

Less: Goods Consumed              (XXXX)

         (opening +Purchases- Closing Stock) 

         Direct Expenses                 (XXXX)

      Gross Profit                          XXXX

Add: Other Operating Income        XXXX

Less: Other Operating Expenses    (XXXX)

          Operating Profit                XXXX

Add :     Indirect Incomes               XXXX

Less :     Indirect Expenses            (XXXX)

              NET Profit                       XXXX  

INCOME STATEMENT is also called profit & loss statement. It consisits of Revenue the business has earned - cost of goods sold to give gross profit. Subtract Operating expenses from Gross profit to give EBIT/EBITDA. Then subtract interest and taxes and deprectiation/amortization (if taken) to get net income.

The first line of an income statement is revenue generated from operations. From this, we deduct the cost of goods sold, which is calculated by netting off opening stock, purchases, and closing stock. The resulting number is called revenue from operations or gross profit.

From gross profit, we deduct operating expenses and add any other income. The resulting number is called profit before interest and tax (PBIT). From PBIT, we deduct interest and taxes. The final number is called profit after tax, which can be transferred to retained earnings.

Sales                                                                XXX

-Cost of Goods Sale

    Opening Inventory     xx

  +Purchases                 xx

  -Closing Inventory       (xx)                            (XXX)                   

Gross profit                                                     XXX

-Operating Expenses                                        (XX)

- Administrative Expenses                                (XX)

PBIT(profit befor interest and tax)                      XX

- Interest/ Finance charges                                (X)       

PBT (profit befor tax)                                         XX

- Tax Expense                                                   (X)

Net Profit/Net Loss                                         XX/(XX)

then there is further steps if you have other comprehensive incomes like gains from non course bussiness or any loss then it would be adjusted in net profits and then you got total comprehensive incomes for share holders leading to retained earnings or dividends.