Lots of SMB owners feel they do not need to understand financial statements just because they have hired professional providers of bookkeeping in Orange County California. They must understand some financial statements at least, particularly the income statement. It’s a key financial statement that outlines the profitability of your business over a specific period of time (a specific year, quarter, or month, for instance). As such, this statement is frequently called the P&L (profit and loss) statement. It showcases revenue (the sales of products and services), minus all of the expenses that were incurred by your business. Components that make up the income statement include; Income: This refers to all of the revenue that has been earned from core operations of your business and also from income the business earns from secondary activities or operations such as interests you earn. Costs of sold goods: This is mostly called ‘cost of sales’ or COGS. It comprises all costs ...