Sample Essay

There are various formats of financial statements for different types of businesses. Each of the formats serves a different function. For instance, income statement indicates the expense and income accounts of a business. The basic format is listing all income sources at the top of the statement obtaining the sum.

Then, all expenses are listed and totaled. This follows obtaining the difference between income and expenses to obtain profits earned over the period. In another format, income is broken down to gross sales where cost of sales and sales returns rare subtracted to give net sales. From this, this is closely followed by estimating Cost of Goods Sold done by finding the sum of the inventory at beginning of the period and purchases during the period then les inventory at the end of the period. This computation results to Cost of Goods sold which is subtracted from gross sales to give profit from sales or margin.

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