1. Income Statement Trading (Retail) Business

2. Income Statement for Trading Business Income Statement for a trading (retail) business is different to that of a service business. Sales of a product is the main source of income for a trading business therefore we must include a new element known as cost of goods sold or cost of sales

3. Income Statement for Trading Business The cost of goods sold (COGS) can include all the expenses incurred to obtain the product and prepare the item for sale. Includes items such as:  Freight  Packaging costs  Custom duty  Any other buying expenses The COGS figure is deducted from the sales figure to give a Gross Profit figure. The gross profit is the profit made before all other expenses are taken into account. SALES – COGS = GROSS PROFIT

4. Income Statement for XYZ Business for the period ended 31 December 2015 INCOME$$ Sales200,000 COGS(120,000)80,000 EXPENSES Salaries16,000 Telephone and Internet10,000 Water and electricity7,300 Property rates3,000 Insurance2,500 Advertising14,000 Stationery654 Bank charges90654,360 PROFIT25,640