How to Create an Income Statement Based on Balance Sheet Changes
An income statement for a company is just that, a detailed account of your total sales over the last quarter, year or other specific time period. The statement is used by your shareholders to evaluate their investment as well as your creditors to evaluate your creditworthiness. The income statement is also sent to the Internal Revenue Service and the U.S. Securities and Exchange Commission along with other financial documents.
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Instructions
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Make your change on your balance sheet. Notate the change by crossing out, not deleting, the previous number and writing the new number in its place. According to Harold Averkamp, a certified public accountant, changes in current assets and liabilities should be marked in operating activities; long-term assets changed in investing activities; and long-term liabilities and stockholders' equity changed in financing activities.
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Create a new income statement to reflect the change on the balance sheet. Gather all of the revenue information for the appropriate time period. Your income statement will show both your revenue and your expenses so you get an accurate view of your gross income. Record each source of income separately in their categories and then total the amount of income received.
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Gather all of your bills and expenses for the appropriate time period and record each of them separately in a separate section on the income statement for expenses. Your expenses include your overhead costs, inventory purchases and equipment leases. Total these figures and then subtract the expenses from the income.
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Note the change from the balance sheet on the income or expenses section of your income statement, who made the change and the date the change is made on the statement or in a footnote at the end of the statement.
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Create an income statement amendment sheet if your income statements have already been distributed to shareholders. Copy the page that needs the change and make the necessary change before redistributing.
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