How to Report Net Income to Stockholders

A firm's net income is the total income remaining after deducting expenses. When presenting this information to stockholders you need to do more than simply providing them with the ending net income; you need to explain how this net income came to be. Do this by creating an income statement, a financial statement that explains the source of your net income.

Instructions

1. Create three columns. The left column is used to list accounts, the middle column is used as the debit column, and the right column is the credit column.

2. Write "Gross revenues" in the left-hand column of the first row, and write the total value of your revenues in the right-hand column -- the credit column.

3. Write "expenses" in the left-hand column directly below the revenues.

4. Write out each specific expense account's name on an individual row, in the left-hand column directly below the title "expenses."

5. Write the corresponding value of each expense account on the same row as the title, in the middle column.

6. Write "total expenses" in the left-hand column on the row directly below the last expense account.

7. Add up the total value of all the expense accounts and write the value on the "total expenses" row, in the right-hand column. Place the amount in parenthesis to indicate that it is a negative credit.

8. Write the title "net income" on the bottom row, in the left-hand column, below "total expenses."

9. Subtract the total expenses from gross revenues and write this figure down on the "net income" line, in the right-hand column.