When preparing a monthly income statement, it is important for it to be accurate and accessible. The information presented on it should be relevant and complete, which means that proper accounting and tracking of revenue and expenditures is vital. Color-coding often makes information easier to find and read, especially net income that is typically expressed using black or red. While a monthly income statement can be created on paper, it may be easier to use a software program such as a simple spread sheet to quickly enter values and calculate results.
Creating a monthly income statement is important for any company or individual who wants to track expenditures and see how revenue compares to costs. One of the most important things about this document is that it needs to be complete and accurate, otherwise it is useless. All sources of income need to be considered for an individual, such as a job, returns on investments, and rent received on property. Companies may have more considerations for revenue on a monthly income statement, but it is just as important that all of them be included.
Any expenditures that a person or business faces must also be on this document. Incoming money is important, but it needs to be compared to funds that are going out. Rent, utility bills, and food expenses are all examples of costs that an individual needs to consider. Businesses preparing a monthly income statement should look at employee salary, overhead costs, and payments to vendors that are all important expenses.
This information can become difficult to track or read once it is part of a monthly income statement, and color-coding can help rectify this. All expenses of a certain type, such as different bills that are similar but to various sources, can be documented in a single color. Similarly, one particular color can be used to indicate a certain type of income, such as payments received from tenants in different rental properties. The net value each month for income or revenue is typically color-coded, with black indicating a profit for the month and red showing a loss.
It can also be easier to create a monthly income statement using computer software. Graph paper or ledgers with columns can be used to make a hard copy of this document, but this is not always practical. Spreadsheet programs are often excellent choices for generating these records. Such software can typically calculate values and make the creation of a monthly income statement fast, easy, and accurate.