The Income Statement is divided into two sections, income or revenue, and expenses or costs.
In this video…
Hi. Greg here for On-Track Business Management. In this video we’ll continue talking about your income statement or your profit and loss statement. Our basic income statement is divided into sections. The first section is income, also known as revenue. When you bill or invoice your jobs, generally you record that amount to the income account. The next section is direct expense. This section is used for costs directly charged to jobs. We should be able to run job cost reports for the same period of time and balance with the direct expense section of our income statement. The next section is overhead. Expenses are required to operate your business, it may be fixed, same amount each month, or they may be variable. Examples might be office rent, telephone, and office supplies. It’s a real cost that needs to be covered in your bid. You might want to periodically review your income statement with your CPA for tax planning and business advice.
In the next video we’ll talk about work in process also known as your WIP report.
Next Video: Work In Process