How to Prepare a Statement of Operations

by Devra Gartenstein; Updated September 26, 2017
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A statement of operations--also known as an income statement, or a profit and loss statement--provides information about a company's business activity during a given period of time. It is similar to the Schedule C section of the federal income tax form, which details profit and loss from business activities, but the Schedule C Form uses its own set of conventions for figuring certain types of expenses such as vehicle mileage and depreciation of equipment over time. A statement of operations concerns itself with actual expenditures during the period it covers. While the purpose of a tax form is usually to make your company look like it earned as little as possible to minimize the amount of tax due, the purpose of a statement of operations is usually to entice investors by showing your business in a successful light.

Items you will need

  • Sales records
  • Ledgers
Step 1

List all of your company's types of income, and the amounts that it generated in each category during the period covered by the statement. Include sales receipts, rental income, interest income and any other source of revenue for your company. Add these amounts to calculate your gross profit.

Step 2

List all of your company's types of expenses, and the amounts spent in each category during the period covered by the statement. Include the costs of materials, labor, rent, utilities, advertising, interest, auto expenses, consulting fees, taxes, licenses, bank account service charges and any other types of expenditures. Add these separate categories to calculate your total expenditures.

Step 3

Subtract your total expenditures from your gross income to calculate your gross revenue.

Step 4

Provide background information for your statement of operations on a separate page by listing the assumptions and conventions that you have used, such as ways you have accounted for company vehicle expenses and equipment depreciation and amortization.

About the Author

Devra Gartenstein has owned and run a variety of food businesses for more than 20 years. She has published two cookbooks: "The Accidental Vegan" and "Local Bounty." Gartenstein holds Master of Arts degrees in philosophy and English literature.

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