What is a Quarterly Income Statement?

A quarterly income statement is a document that can make an entrepreneur monitor the profits and losses that can come from his or her business in three months. It is also known as the profit account or loss account. It is a financial statement that states the expenses in the business and the profits that you can get from it. It will detail your total income and the total profits that you have in three months. It shows how your revenues can be converted into income.

The income statement can be calculated by balancing the accounting books. The financial health of the company is being considered why you have to come up with this kind of statement. A good way for you to start creating an income statement is by considering a Microsoft Word template or an Excel template. In corporate finance, you must carefully analyze the outcome of your business and you can only do that by calculating the income of your business. Together with a balance sheet, you must compute your net income and assess the profits that you are having.

A quarterly income statement is a good report on how you can improve your business by ensuring that you can generate a better income and profit next time. It is a consolidated approach so that you can ascertain that your business is having enough profits in regard to all your expenditures. Profit needs planning and a strategy that you can apply is by having a quarterly income statement. Through this, you will know your projected financial projections that you need to consider the next time that you make decisions on your business.

Whether the quarterly income statement is used for personal purposes or business purposes, it is a good idea to do this to know the exact amount that goes into your pocket in a quarter. The statement is also needed for tax purposes. You can pay your taxes quarterly and use the statement, knowing that paying quarterly is a good frequency. For whatever purposes, the statement is beneficial because it is proof of your net income, proving that it is the certain amount that you get in the quarter.

Elements of a Quarterly Income Statement

Are you needing an income statement format? Before you worry about how to make a quarterly income statement, you can consider knowing the elements of the statement so that you can make it complete. Read the following and consider some of the elements of a quarterly income statement:

Business Revenue: This is the total money that your business gets from selling or providing your services. This is the amount of money that you have earned. This can be called the operating revenue. In getting the business revenue, you should combine all your earnings. To get an accurate report, you should record all your earnings so that it will be easy for you to calculate its total.Non-Operating Revenue: This is the money that you have gained from royalties from your partners. It can be gained through business activities. The money that you will earn from them is the non-operating revenues. Like the operating revenue, you must be diligent in recording all your earnings for the non-operating revenue. This is recommended to get accurate financial projections.Gains: It is known as the other income. All the money that you can get outside the core operations of your business is referred to as gains. For example, if you have sold a vehicle or land, the money that you can earn is considered as gain. Carefully record the gains to get an accurate report. This is to get a good quarterly income statement.Business Expenditures: These are the money that you have given in exchange for goods and services to keep your business operating. Usually, you have a receipt at the time that you have purchased these things. It will be good to document them in the income statement to have a better analysis of your business. Expenditures are the things that you have paid on the spot. They are a little different from expenses. If you have bought a vehicle and you have paid it immediately on cash, it is an expenditure. But if you have to pay it for years, then it is considered as expense.Cost of Goods Sold: Simply known as COGS, these are the total costs of how you produce your products. The costs of the materials that you used are included and even the costs that you have spent on labor. You must sum up all your expenses carefully to get an accurate COGS.Operating Expenses: These are the costs that you have spent as you operate your business. These expenses include payments for utilities, rent, and office supplies. Whatever things that you use in operating your business must be included in the costs of the operating expenses.Depreciation: This is the money that you have spread out for some time. As equipment or vehicle becomes old, its value declines. Depreciation depends upon the kind of your business.Owner’s Salary: This is the salary that you pay yourself. You take out this money from the money that you have earned. As an entrepreneur, you have exerted a lot for your business, and you need to reward yourself by giving yourself a salary. Take out a considerable amount that can compensate for all your hard work.Earnings Before Taxes: This is the total amount of your earnings before paying your taxes. It is the sum of all your revenues and gains. You needed this amount for you to calculate your net income. In calculating your earnings, be sure to compute carefully.Profits: You can get your profit by deducting COGS from the revenue. The profit is the amount that you have benefited from all your efforts. It is what you have gained after you have given your services or sold your products.Net Income: After deducting all your expenses to your profit, you can get the net income. This is the most important in the income statement. To know that your business is doing fine, the net income should be positive. If it is negative, you must check your operations. Negative net income may be natural for new businesses but you have to do something to change everything.

Benefits of a Quarterly Income Statement

Are you wondering what a quarterly income statement example or a sample quarterly income statement is all about? Do you want to know its benefits so that you can start having a quarterly income statement for your business? Read and consider the following benefits:

Sales Cost Tracking: You can track your sales through the quarterly income statement. You can monitor the cost of all your sales. This can help you to have a better sales forecast that you can use in your business. It can also help you with your sales plan and sales strategy. You will know if you are gauging too many expenses. For example, if you have a restaurant, you have to list all your expenses in food and labor. It will give you an idea of how you will price your products. If you cannot cover all your expenses, you have to raise the price of your products or be attentive to the cost of sales.Business Sustainability: You can determine how you can generate your revenue better through the income statement. You can be prepared when entering new markets. You can have better decisions when you have to buy new equipment or you have to take a business loan or enter business loan agreements. If you will experience losses in business, you can better decide on how you will invest in your business operations. On the other hand, if you will have good profits, you will know how to expand your business.Tax Preparation: The income statement will surely help you with tax preparation. If you will file for quarterly taxes, the income statement is the best proof that you can show to the tax bureau. You can state how much you generate in your business. It is a good document that can support your claims. It will be easier for you to file taxes.Better Planning: Whether you are making a financial forecast or a sales forecast, the income statement will help you. You can better plan your business using the statement. You can analyze the things in pricing more easily. You will know how to adjust your sales strategy. It can give you the capacity to predict some things for your business. An accurate income statement can make you analyze margin capacities.Good Decision-Making: Through the income statement, you will know the financial footing of your business. An accurate income statement can help you to have wise decisions whenever you have to make expenditures. You will know if you will have enough money for all the expenses. Or if you have insufficient funds for everything.Company’s Profitability: You can further analyze your profits using a quarterly income statement. You can keep track of the profits that you have for months. If you will learn that you have low profits, you can do something to improve your business operations. If you will find that you have great profits, you can keep on doing the things that make your company have this good profit.Compliance Report: You can easily comply with tax regulations using a quarterly income statement. Taxes are mandatory. But as you have your quarterly income statement, you can be reminded that you have to pay your taxes. To settle your taxes better, you can use your balance sheet and cash flow statement so you can provide accurate financial information.

How to Create a Quarterly Income Statement

Do you need a quarterly income statement template or a quarterly income statement example? Are you about to create a quarterly income statement? Well, if that is your need, we have good news for you. We have provided some steps for you to use to create a quarterly income statement. They are the following:

  • Step 1: Prepare for the Quarter

    Doing a quarterly income statement means that you have to prepare the income that you have for the quarter. Before calculating your income, you should know that you have to prepare all the materials that you need for the quarterly statement. Keep a record of everything that you need. You can label all the materials as Q1, Q2, Q3, or Q4, depending on the quarter of the year.

  • Step 2: Create a Balance Report

    You need the balance report of your business to calculate your income statement. Use accounting software to generate it more easily. This report lists your account in a ledger. It is a vital part of the statement because you will know your balances. It will provide all the figures that you need for the statement.

  • Step 3: Compute Your Revenue

    You have to calculate the total sales of your business. These are the money that you have gained from your services over some time. You have to calculate everything, even on services that you have not yet received payments for. Add all the revenues using the balance report. State the total amount of the revenues in the income statement. Use a formula to ensure that you will get an accurate amount.

  • Step 4: Know COGS

    The cost of goods sold (COGS) should be calculated. These are the costs of labor, materials, and other expenses. These are the things that you need so that you can provide your services. Calculate all the COGS using the balance report. Add them all up and list them below the revenue item.

  • Step 5: Compute the Gross Margin

    Deduct COGS to the revenue. Doing this will calculate the gross margin. This is the amount that you have gained from the sales of your products and services.

  • Step 6: Add Operating Expenses

    Compute all the operating expenses on your balance report. Double-check everything to have an accurate calculation. This will be the line item for operating expenses. Place it below the gross margin amount.

  • Step 7: Compute Your Income

    Deduct the operating expenses from the gross margin. You will get the pre-tax income amount. State the amount at the bottom of the statement.

  • Step 8: Include Taxes

    To calculate the tax that you have to pay, you should multiply the tax rate by the pre-tax income amount. State the result to the income statement, labeling it as the income tax.

  • Step 9: Compute Net Income

    To calculate the net income, you must deduct the income tax to the pre-tax income amount. The result will be the final item in your statement. You will know your profitability after getting this amount.

  • Step 10: Finalize the Statement

    Add a quarterly income statement heading to finalize the statement. Add the information about your business. Then state the date of the quarter. Using the data that you have gathered, you now have an accurate income statement. This statement will benefit your business and will help you in planning for your business.


What are the types of income statements?

The types of income statement are the single-step income statements and multiple-step income statements. The single-step income statement is easier to handle, calculating the profits and losses of the business. The multiple-step income statement separates your operating revenues and expenses from the non-operating revenues and expenses.

What are the tips for a quarterly income statement?

The tips that you can use for a quarterly income statement are considering accounting software and getting the help of professionals. Through these, you can have an accurate statement.

For you to know the returns that you can have from your business, you must generate a quarterly income statement. You can further analyze your business so that you will know if you need to have a better sales strategy. Well, do you need a template for a quarterly income statement? This post has 3+ SAMPLE Quarterly Income Statement in PDF. You can pick any that you think will help you. Download now!