Income reported on Income Statement is based on ACCURAL ACCOUNTING, all revenues earned in the year & all expenses incurred in that year (not on the cash generated or cash paid during the accounting period.

FAQ: WHAT IS DIFFERENCE BETWEEN ACCURAL BASIS AND CASH BASIS OF ACCOUNTING?

Accrual Based Records: Transactions are recorded when they take place Regardless cash transactions

FAQ: What is GROSS MARGINS?

Gross margins were the excess of net sales over the cost of goods sold

Methods to Prepare Income Statement:

No separate section for COGS and GROSS PROFIT.

WHAT IS OPERATING PROFIT?

Operating Profit is arrives after deducting:

selling, administrative and general expenses
Provision for bad debts
Interest
Miscellaneous expenses

from the gross profit

How Profit before tax arrives?

Profit Before Tax When other income is added and other expenses are deducted from the operating profit we get profit before Tax

What is Non-Operating Income

Income generated other than manufacturing and seling operations (or)Operating activities termed as NON OPERATING INCOME

Interest earned on fixed deposits
Dividends and profit earned by sale of assets and share
Loss incurred due to sale of assets & Shares

Difference between CAPITAL EXPENDUTRE & REVENUE EXPENDITURE

Capital Expenditure:

Expenditure which gives benfit to many years
Accounting Treatment is chargeable to that asset

Revenue Expenditure:

Expenses incurred to Revenues and Expenses
Accounting Treatment is Charge to Expense Account

Revenues
Deduct: Cost of goods sold and expenses
Income from continuing operations
Discontinued operations
Extraordinary gains and losses
Cumulative effect of change in accounting principle
Net income

Income Statement Structure:

Update daily transactions

Public WKB As Workbook, InputSH As Worksheet, SH As Worksheet

Sub CraeteNames()
On Error Resume Next
Set InputSH = ThisWorkbook.Sheets("InputData")
'Delete existing Names
For N = 2 To InputSH.Cells(1, 12).End(xlDown).Row
'ThisWorkbook.Names(N).Delete
InputSH.Names(InputSH.Cells(N, 12).Value).Delete
Next
InputSH.Range(InputSH.Range("L2"), InputSH.Range("L2").End(xlDown)).Clear
'Create New Names
ColumnNumber = 14
Do Until InputSH.Cells(1, ColumnNumber) = ""
InputSH.Cells(1, ColumnNumber).Activate
Lastrow = InputSH.Cells(1, ColumnNumber).End(xlDown).Row
InputSH.Range(Cells(2, ColumnNumber), Cells(Lastrow, ColumnNumber)).Select
InputSH.Names.Add Name:=InputSH.Cells(1, ColumnNumber).Value, RefersTo:=Selection
ColumnNumber = ColumnNumber + 1
Loop
InputSH.Range("L2").Listnames
InputSH.Range(InputSH.Range("M2"), InputSH.Range("M2").End(xlDown)).Clear
InputSH.Range("G2").Clear
With InputSH.Range("G2").Validation
.Delete
.Add Type:=xlValidateList, AlertStyle:=xlValidAlertStop, _
Operator:=xlBetween, Formula1:="=InputData!L2:L" & InputSH.Range("L2").End(xlDown).Row
.ErrorMessage = "Please select from dropdown"
.IgnoreBlank = True
.InCellDropdown = True
End With
InputSH.Range("A1").Select
End Sub

Sub Add_Transaction()
Set InputSH = ThisWorkbook.Sheets("InputData")
Lastrow = InputSH.Range("A" & Rows.Count).End(xlUp).Row + 1
InputSH.Range("A" & Lastrow).Value = InputSH.Range("F2").Value
InputSH.Range("B" & Lastrow).Value = InputSH.Range("H2").Value
InputSH.Range("C" & Lastrow).Value = InputSH.Range("I2").Value
InputSH.Range("F2:I2").ClearContents
InputSH.Sort.SortFields.Clear
InputSH.Sort.SortFields.Add Key:=InputSH.Range("A1:A" & Lastrow), _
SortOn:=xlSortOnValues, _
Order:=xlDescending
With InputSH.Sort
.SetRange InputSH.Range("A1:C" & Lastrow)
.Header = xlYes
.Orientation = xlTopToBottom
.SortMethod = xlPinYin
.Apply
End With
End Sub

Create Consolidation of Income Statement

Public WKB As Workbook, InputSH As Worksheet, SH As Worksheet

Sub Create_Income_Statement()
Set InputSH = ThisWorkbook.Sheets("InputData")
'To add the workbook
Set WKB = Workbooks.Add
Set SH = WKB.Sheets("Sheet1")
Dim Output As Integer
For r = 7 To InputSH.Range("I" & Rows.Count).End(xlUp).Row
SH.Cells(r - 3, 2).Activate
If InputSH.Range("I" & r).Font.ColorIndex <> 9 Then
rownumber = 2:
Do Until InputSH.Range("B" & rownumber).Value = ""
If InputSH.Cells(r, 9).Value = InputSH.Range("B" & rownumber).Value Then
Output = Output + InputSH.Range("C" & rownumber).Value
End If
rownumber = rownumber + 1
Loop
SH.Cells(r - 3, 3).Value = Output
Output = 0
End If
SH.Cells(r - 3, 2).Value = InputSH.Cells(r, 9).Value
SH.Range(Cells(r - 3, 2), Cells(r - 3, 3)).Select
'RemoveSpecialCharacters -CleanString
'Create the Names based on selection
WKB.Names.Add Name:=NameAfterFormatting(SH.Cells(r - 3, 2).Value), RefersTo:=Selection
'Provide the formatting to Headers and Body
If InputSH.Cells(r, 9).Font.ColorIndex = 9 Then
HeaderFormatSelection
Else:
BodyFormatSelection
End If
Next
SH.Range("B2:C2").Select
Increase_ColumnWidth
FormatTopHeader
SH.Name = "Consolidated Income Statement"
SH.Range("B3").Select
SH.Range("B3").Value = "Particulars"
FormatSingleCell
SH.Range("C3").Select
SH.Range("C3").Value = "2018"
FormatSingleCell
RemoveGridLines
CalculateFormulas
End Sub

Function RemoveGridLines()
ActiveWindow.DisplayGridlines = False
End Function

Function HeaderFormatSelection()
With Selection
.Font.ColorIndex = 9
.Font.Bold = True
.Font.Name = "Century"
.Font.Size = 15
.Columns(2).HorizontalAlignment = xlCenter
.VerticalAlignment = xlCenter
End With
End Function

Function BodyFormatSelection()
With Selection
.Font.Name = "Century"
.Font.Size = 15
.Columns(2).HorizontalAlignment = xlCenter
.VerticalAlignment = xlCenter
End With
End Function

Function NameAfterFormatting(ResultString)
For i = 1 To Len(ResultString)
If UCase(Mid(ResultString, i, 1)) Like "[A-Z]" Then
NameAfterFormatting = NameAfterFormatting + Mid(ResultString, i, 1)
End If
Next
End Function

Function FormatTopHeader()
With Selection
.Merge
.Value = "Income Statement"
.Font.ColorIndex = 2
.Font.Bold = True
.Font.Name = "Century"
.Font.Size = 15
.HorizontalAlignment = xlCenter
.VerticalAlignment = xlCenter
.Interior.ColorIndex = 52
End With
End Function

Function FormatSingleCell()
With Selection
.Font.ColorIndex = 9
.Font.Bold = True
.Font.Name = "Century"
.Font.Size = 15
.HorizontalAlignment = xlCenter
.VerticalAlignment = xlCenter
End With
End Function

Function Increase_ColumnWidth()
With Selection
.Columns(2).ColumnWidth = 15
.Columns(1).ColumnWidth = 45
End With
End Function

Function CalculateFormulas()
' SH.Range("Sales").Select
' SH.Range("NetSales").Columns(2).Select
' SH.Range("Sales").Columns(2).Select
' SH.Range("SalesReturns").Columns(2).Select
'SH.Range("NetSales").Columns(2).Value = SH.Range("Sales").Columns(2) - SH.Range("SalesReturns").Columns(2)
'MsgBox ("=" & SH.Range("Sales").Columns(2).Address(False, False) & "-" &
SH.Range("SalesReturns").Columns(2).Address(False, False))
SH.Range("NetSales").Columns(2).Value = "=" & SH.Range("Sales").Columns(2).Address(False, False) & "-" &
SH.Range("SalesReturns").Columns(2).Address(False, False)
FromAddress = SH.Range("Expenditure").Columns(2).Offset(1, 0).Address
ToAddress = SH.Range("TotalExpenditure").Columns(2).Offset(-1, 0).Address
SH.Range("TotalExpenditure").Columns(2).Value = "=sum(" & FromAddress & ":" & ToAddress & ")"
SH.Range("PBDIT").Columns(2).Value = "=" & SH.Range("NetSales").Columns(2).Address(False, False) & "-" &
SH.Range("TotalExpenditure").Columns(2).Address(False, False)
SH.Range("PBIT").Columns(2).Value = "=" & SH.Range("PBDIT").Columns(2).Address(False, False) & "-" &
SH.Range("Depreciation").Columns(2).Address(False, False)
SH.Range("PBT").Columns(2).Value = "=" & SH.Range("PBIT").Columns(2).Address(False, False) & "-" &
SH.Range("Interest").Columns(2).Address(False, False)
SH.Range("ReportedNetProfitPAT").Columns(2).Value = "=" & SH.Range("PBT").Columns(2).Address(False, False) & "-" &
SH.Range("Tax").Columns(2).Address(False, False)
SH.Range("AmountCFtoBalanceSheet").Columns(2).Value = "=" & SH.Range("ReportedNetProfitPAT").Columns(2).Address(False, False) & "-" & SH.Range("Dividend").Columns(2).Address(False, False)
End Function