Income statement

Lesson Details:

Video Transcription: In this video let's talk about the income statement of your business plan which is the second of the three major sections of the financials of your business plan this is only a little bit more complicated than the cash flow statement because the cash flow statement only takes into account the cash that's going in and out of your business and that's revenue or expenses so is direct flows of cap of revenue or expenses in and out of your business the only difference between that and the income statement is that the income statement takes a look at more items that are going in an another statement for example interest that you might accrue loans stock investments or losses so it the income statement gives a fuller financial pictures a picture and sometimes when in a cash flow you might have a negative cash flow for a month like we had in our previous example sometimes other items on the list like we'll see here you can make your business profitable for example you see that for this example I added you get some bank interest some real estate interest customer loan interest and stock investments right profitable and that pushed the overall income to overall revenue not income sorry to 19,000 850 whereas i also have some additional losses some duplication some donations some investment losses and so that bumped up the losses as well but they eat the the revenue was more than that which actually made the business profitable and that's the only difference between the income statement and the cash flow statement is that the income statement has these additional non direct revenue and non direct expense items on it so it gives the full picture of your profitability that particular time for the for that for that particular very time period and again for most small businesses when you're starting out you want to be doing this monthly large companies publicly traded companies they do it quarterly just so you can get a sense of the health of your business I recommend that you do this monthly.