Now that we've got our pre-closing trial balance complete for our GBD Fits company, let's go ahead and create our income statement!
Income statement explained
In the realm of our GBD Fits business, the income statement will show us how profitable the company has been over the month of March. It will compile our revenue and expenses to do so.
The income statement shows the profitability of the company by compiling all revenue and expenses over a span of time.
...and that's pretty much all you need to know about it. Let's figure out how we can create ours for GBD Fits!
How to create an income statement
All we're going to do is take the pre-closing trial balance and compile all the revenues and expenses from it. Then, we'll determine the difference!
This difference will determine if we operated at a net profit or a net loss over the month of March.
Just to be explicitly clear...
The income statement shows us if we operated at a net income (revenue > expenses) or a net loss (revenue < expenses).
Let's go ahead and start by identifying the revenue accounts in the pre-closing trial balance.