Open it and set the period
Open Reports, then Income statement. Set From and To and press Run. It answers one question: how much came in and went out over this period, and what was left?
Read it from top to bottom
- Revenue: the value of what you sold, without VAT.
- Direct expenses (cost of revenue): what the things you sold cost you directly, like the cost of goods.
- Gross profit (1): revenue less direct cost. It shows whether your pricing leaves a margin.
- Indirect expenses: what you pay whether or not you sell, like salaries, rent and electricity.
- Net income (loss) (2): what is left at the end. A loss shows in red.
Compare and ask
The first column is your range and the second is a range of the same length right before it. So 30 days compare with the 30 days before them. Look for:
- The gross margin: has it dropped? Cost may have risen or prices fallen.
- An expense line that jumped: press it to open the statement and check the movements.
- An expense missing from a month: it may not be recorded yet, like rent or salaries.
Profit is not cash. An invoice counts as revenue when issued even if the customer has not paid, so you can show a profit with an empty bank account. Read Cash flow alongside this statement.
If a cost looks misplaced
Where an account sits in the statement comes from how it is set up in Chart of accounts. If a cost landed on the wrong account, correct its document, or use a manual journal if it was a manual entry. Any correction shows in the statement once posted.
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