Archive for March, 2010

The following document is a standard teaching document. You will find it anytime you either ask or research for yourself, the answer to the question, “What is an Income Statement”.

I have made my own notes that point out basic problems in this document and the problems that are taught to new business owners, “right out of the gate”.  (Understand that I am not saying this document is WRONG. What I am saying, is that while it attempts to teach, its complexity and lack of insight into the reader perspective, creates more confusion then it needs to)

One of the Fundamental Principles of accounting is that revenue and the expenses necessary to earn this Revenue should be as accurate (as nearly as possible) when preparing reports (Income statement and Balance Sheets) for management regarding the results of the operations for a given time period, (month/year). Without accurate data, and records, sound financial decisions are not possible.

The Income Statement (a.k.a. Profit and Loss Statement) is usually prepared on the same date as the Balance Sheet; however, unlike the Balance Sheet, the Income statement does not provide information which is “frozen” for one moment in time.  It presents information for activities, which have occurred over a period of time. The Income Statement is sometimes called the Profit and Loss Statement (P & L Statement) because it traces a company’s profits or losses over a period of time – usually one (1) year. The income statement is an exhibit of a basic business equation:

REVENUES minus COST and the associated EXPENSE equals NET INCOME (or Loss).

(This mathematical formula is taught to us all in business and is fundamentally flawed.  I hate that this is the math foundation that all business operates on.  You start out WRONG and generally, finish WRONG and you never know why.  Watch for my next article and you will find out WHY this math is WRONG!!!!!)

The Income Statement is traditionally organized into four (4) major categories of information:

1)   Revenues (Sales or Net Sales)

2)   Costs and Expenses (Operating Expenses)

These are usually presented as:

Cost of Goods Sold (COGS) or Cost of Sales

Operating Expenses

The Operating Expenses may be further sub-divided into:

Selling Costs and any other meaningful grouping, and General and Administrative Expenses (G & A)

3)   Tax on Income (Federal and / or State Taxes)

4)   Net Income for the Month/Year 

(There are 5 key points on any income statement and in order to, CONTROL YOUR OWN DESTINY, YOU MUST KNOW WHAT THEY ARE AND HOW TO MANAGE THEM!!!!)

The normal composition of an Income Statement lists all of the above for a one (1) month period, providing management an immediate insight into the total business activities of their company for a one (1) month period of time.  The statement normally lists year-to-date (YTD) figures as well.  YTD figures are a compilation of all figures for preceding months plus the current month.  This gives management an insight into the total business activities of their company over an extended period of time. (Normally 12 month or less.)

REVENUES (SALES or NET SALES): This section lists all money received by the company during the income statement period from the sale of products or services, or from other revenue sources.  The company may have any number of categories listed separately under the REVENUE (SALES) section of the Income Statement.

COST AND EXPENSES (OPERATING EXPENSES): Normally the first listing under the COST AND EXPENSE section of the Income Statement is “Cost of Goods Sold” (COGS) or “Cost of Sales” (COS) depending on the particular operation; Manufacturing or Retail sales etc. This listing is usually the largest single expense item on the Income Statement and it should include all costs except General and Administrative costs.(Specifically, tracking how much you spent on material and labor, to produce a product or service that is ready to sell)

COGS / COS “Cost of Sales” may be divided into “Direct” and “Indirect”.  It should include all expenses that are directly attributable to the production or purchase of goods which are sold and services rendered, i.e., labor costs including taxes, contract labor, rental equipment, vehicles and associated expenses, freight, etc.

GENERAL AND ADMINISTRATIVE EXPENSES [G & A]:  These expenses include salaries and labor costs of all employees not in “Cost of Sales”, the cost of office operation, rent, insurance and all other GENERAL costs required for the operation and management of the company that ARE NOT assignable to services rendered, production or sale of goods.  The company may have any number of individual categories listed under this section. 

DEPRECIATION EXPENSE:  There are numerous depreciation schedules and policies, i.e., straight line, declining balance, accelerated method, etc.    The company should use the depreciation method that most realistically reflects the decline in service potential of the assets and that results in the best earnings quality.  Management should discuss the various depreciation schedules now being used with the company Certified Public Account (CPA).

INTEREST EXPENSE:  This expense is the annual cost of financing the company through borrowed funds.

The Income Statement figure for TOTAL COST AND EXPENSES is a total of the entries for:

Cost of Sales (Direct and Indirect)

General and Administrative Expenses

Depreciation Expense

Interest Expense

TOTAL COST AND EXPENSES are DEDUCTED from TOTAL REVENUES.

The result is called Income Before Taxes or OPERATING PROFIT (LOSS).

TAXES ON INCOME:  Income taxes and other types of taxes are listed on the Balance Sheet as a Current Liability.  The Balance Sheet shows the total of all types of taxes owed as of the Balance sheet Date.  The amount shown is usually less than the total tax expenses for the year.  This is because taxes are normally paid in installments as the year progresses.  Some taxes have already been paid during the year prior to the Balance Sheet Date and the amount shown on the Balance Sheet will probably be paid in installments after the Balance Sheet date.

The actual expense of taxes paid during the year is shown on the Income Statement.  Some types of taxes are included in the figures for Selling Expense and General and Administrative expense.  The Income Taxes paid during the year are shown separately. On the Income Statement they are listed in a separate section called Taxes on Income.

Depending on how the company wishes to set up its Income Statement the next entry may be OTHER INCOME AND EXPENSE.  This category may be made up of such items as Bad Debt Recovery, provision for Income Taxes, Interest Income, Gain/Loss on Sale of Assets, etc.  The total of all items in this category are then added or deducted, whichever the case may be to/from the INCOME BEFORE TAXES  (Operating Profit (Loss)) figure. The result is NET INCOME for the year.

NET INCOME FOR THE YEAR is the most important item of financial information on the Income Statement.  It is the key measure of the company’s performance.  The amount of profit achieved after all costs, expenses and taxes has been paid from revenues.

After reading this document. ask your self , “Dis this document help?” Probably not.  Especially if you are just starting out in business and have no financial training.

Keep in mind that the above layout and description for an income statement is what is referred to as “TAXED BASED ACCOUNTING”. I will discuss this type of accounting in later articles.

Remember where, “MY”, focus is. The small business owner.  They are this country’s life blood. They are the ones that ensure our future.  This I state again because, “you must communicate at a level that accomplishes your goal and objective”. 

I remember once attending a meeting where the speaker had a PhD in Business.  At the end of the long and very boring meeting every person in the room was confused and a tad bit angry.  Angry because of the money that was spent on this speaker and at the unusable information that was conveyed.   The truth was, the speaker did convey valuable information on strategic planning, but had no idea how to convey this information to people responsible for its implementation.  The speaker detected this uneasy feeling in the room, but instead of recognizing it for what it really was, stated to me, “these people act as if they just came out of a garage with this business!”  Reality, they were only out of their garage for 2 years, knew nothing of business planning, of managed growth, and absolutely knew nothing about financial management.  This speaker was retained to enlighten the team, instead he was speaking as if he were in a classroom of graduate students.

If your goal is to teach or train, you must communicate at a level that can be understood and actually utilized. 

My point, know your audience and speak to them, not at them.

This applies to any industry. For example, if a PhD in Social Work speaks to an offender as a PhD, how much impact on this person’s life, will they really have?

This therefore, is the problem with this training document……………

My next several articles will explain the income statement in terms that anyone can easily understand and apply, no matter your background or your operating business entity.

Marvin Jackson
http://www.articlesbase.com/management-articles/understanding-the-income-statement-the-typical-explaination-720654.html

There are many work-from-home programs on the Internet today that will assure you that you will earn a handsome amount working at home, however most of these programs don’t deliver on their promises. If you aren’t careful you will end up joining a work-from-home program that just takes your money and leaves you with an empty pocket.

They were many ways to make money and information on how to get started and do it at home on computer. When done, exact you can make way more per day then you ever could work a job for least wage or a little bit more than that per hour. What I soon learned was that the internet was a virtually untapped source for ways to make money.

But for a new person it was so puzzling. It’s good for one to take assist when he needs it. I knew I needed to find somebody I could trust that was making money online and could teach me to do the same thing. This is good advice today. There are factually thousands of make money programs available that you can join right now and start making money right away. On the other hand you made need an online trainer to help you get started otherwise this option of making money online will take you to heavy loss. Now a day it is quite tough to find a reliable work and source for doing so.

The Internet serves as an outstanding tool for investors, allowing them too easily and cheaply research investment opportunities. But the Internet is also a brilliant tool for fraudsters. That’s why you should always think twice before you invest your money in any opportunity you learn about through the Internet. Anyone can make money on the internet, but it isn’t as easy as many think. What makes it difficult to make money online is that there is so much information around it can be actually hard to get started. “Spam” – junk e-mail – is so cheap and easy to create; fraudsters increasingly use it to find investors for fake investment schemes or to spread false information about a company.

Spam allows the unprincipled to target many more probable investors than cold calling or mass mailing. Using a bulk e-mail program, spammers can send personalized messages to thousands and even millions of Internet users at a time.  If you want to invest wisely and turn clear of frauds online, you must get the facts. Never, ever, make an investment based solely on what you read in an online newsletter or bulletin board posting, especially if the investment involves a small, thinly-traded company that isn’t well known. And don’t even think about investing on your own in small companies unless you are willing to examine each company thoroughly and to check the truth of every statement about the company.

The first thing you should understand about making money online is that it’s never going to make you rich overnight. It can make you rich, and you can make money overnight, but the odds of you getting rich overnight are about equal to you getting sent to prison for fraud, embezzlement or the like. Knowing this truth off the strike is going to put you in an improved intellect set than most people who try to start a trade online.

Jeff
http://www.articlesbase.com/business-opportunities-articles/make-money-online-is-it-real-736742.html

please tell me how can i make money online, with out investing anything, but i have my time to invest online but no money, Help me.

Try watching some advertising.
Just have a look.
You don’t lose anything.
http://infinity.alientrust.com/?ref=22659

I will like to make money online but i dont have money to buy anything to start the business,Can anybody tell me what i can do to earn good money online thanks you so much.You can contact me at samson.ayodele132@gmail.com
Samson

SPAM F UCKING BLOWS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I would like to hear from people who have found successful ways to gain referrals. I previously asked a similar question but the wording was wrong and I got a rude answer so I deleted the question. I am genuinely interested in ideas that anyone might have about this topic. I didn’t post a link for anyone to sign up on so I would appreciate helpful answers, not rude replies telling me to take my question to facebook or some other site.

The best way to get referrals is definitely trading referrals with other people (a "I’ll sign up for your site if you sign up for mine" type of deal). I get 80% of my referrals this way.

Finding people to trade with can be tricky. There’s a site called Getref.com that some people use, but it’s overly time consuming. It uses a "credit" system where you earn points to get a credit for a referral… and of course the best way to get points is referring other people to the site… bringing you back to where you started!

I made a forum last week just for trading referrals (http://referrielle.proboards.com/index.cgi). Free, direct, and to the point. I’m searching around for members, so it might be of help to you in the future.

Until then, search around for people looking to trade. Try Youtube comments, forums, and here on Yahoo Answers.