1. Entrepreneur

How to Calculate and Prepare a Service Company Income Statement

A series of steps for calculating and compiling an income statement for a service company.

The income statement is one of the financial statements made by the company, in order to describe the amount of income and expenses of a company, in a certain period. In addition, it is also an illustration of the company's financial condition during that period.

Reports made at the end of this period need to be prepared in detail, both by trading companies and service companies. Moreover, if the company is a large or multinational company.

Therefore, this article will provide an explanation regarding how to calculate and compile an income statement, especially on service Company. So, when the evaluation is carried out, all data compiled by the company can be accounted for. Here's the explanation.

Service Company Income Statement

The income statement of a service company is a report to measure the operational success of a service business, during a certain period. Every service company needs to compile this report, including service businesses of workshops, salons, electronic repairs, banks, and others.

The formula for calculating the profit and loss for service companies, before being compiled into a report, is as follows:

With a note, after the calculation, the company will earn a profit, if the amount of revenue is greater than expenses. On the other hand, the company earns a loss if the total revenue is less than the expenses.

How to Calculate the Profit and Loss of a Service Company

Here are the steps for calculating the profit and loss of a service company, so that it can be compiled into a service company's profit and loss statement, with the following case examples:

    • For example, the profit and loss of a service company that will be calculated is the company 'Rudi's Workshop', with the basic accounting equation as financial data, as follows:

    • The first step in calculating profit and loss is to know the income and expenses of the service company.

    • It is known that Rudi's workshop income is service income of Rp. 17.000.000.
    • It is also known that the Loss Workshop expenses consist of rental expenses, salary expenses, equipment expenses, equipment depreciation expenses and electricity and telephone expenses, which if added up the total expense is Rp. 13.600.000.
    • After knowing each of the total revenue and total expenses of Rudi's workshop, the profit and loss of the service company can be calculated as follows:

  • So, the result is IDR 3.400.000, because the calculation result is positive, the Rudi Workshop service company is making a profit.

How to Prepare a Service Company Income Statement

There are also two methods of preparing the income statement for service companies, namely the direct method or the direct method single step and indirect method or multiple steps. The following is an explanation of the two methods.

    • Direct Method (SingleStep)

The method of preparing the income statement of a service company directly or single step, compiled by adding up all revenues and all expenses without separating profit from operational and non-operational activities.

An example of the report format is as follows:

    • Indirect Method (Multiple Steps)

The method of preparing the profit and loss statement of a service company indirectly or multiple steps, compiled by classifying income and expenses by type. There are two types that are grouped, namely operational and non-operational activities.

An example of the report format is as follows:

This is a series of steps for calculating and compiling an income statement for a service company. May be useful.

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