What are Income Statement and Bookkeeping: Revenue, Expenses, and Costs?

What are Income Statement and Bookkeeping: Revenue, Expenses, and Costs?

• Book Keeping
• August 31, 2021

In continuation to the last blog, here we are discussing what are Income Statement and Bookkeeping: Revenue, Expenses, and Costs?

Income Statement and Bookkeeping: Revenue, Expenses, and Costs  

The income statement is developed by using revenue from sales and other sources, expenses, and costs. In bookkeeping, each financial transaction in the accounting journal that falls into one of these three categories.

The information from a company's balance sheet and income statement gives the accountant a full financial picture of the firm's bookkeeping transactions in the accounting journal at the end of the year.

Revenue is the income a business receives from selling its products or services.  Costs, also known as the cost of goods sold, is all the money a business spends to buy or manufacture the goods or services it sells to customers. The Purchases account on the chart of accounts tracks goods purchased.

Expenses are representative of the money that has been spent to run the business related to a product or service sold. An example of an expense account is Salaries and Wages, or Administrative expenses.

A bookkeeper handles identifying the accounts in which transactions should be recorded. For example, if the business makes a cash sale to a customer and your business uses double-entry bookkeeping, you would record the cash received in the asset account called Cash and the sale would be recorded in the revenue account called Sales.

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