How to Report Income Expense as a Separate Item on an Income Statement
Income statements show the profitability of a company. As such, reporting expenses is an integral part of the income statement. While an income statement gives information regarding a company's past performance, it is also indicative of a company's future performance. Listing the income expenses as a separate item on the statement provides interested persons with a breakdown of how much it costs the company to make money. Income expenses are expenses that are directly related to revenue such as wages and inventory.
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Instructions
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1
Start your income statement by listing the time period covered. Enter your total revenue.
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Make an "Income Expense" category. Subdivide this category with any expense you have that is a direct cost of earning revenue. While your subcategories are dependent on your business, some examples include wages, cost of goods, advertising and floor model depreciation.
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Review your ledger for the statement period and total your expenses in each subcategory. Enter the amounts on your income statement.
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4
Total your subcategories to calculate your total income expense. Enter the total on your statement.
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Tips & Warnings
An income statement can be as general or detailed as you prefer. Lenders and investors typically want a detailed statement to aid their decision to loan money or invest in your company.
