An income statement measures a company's profit or loss over a period: it starts with revenue, deducts cost of sales and expenses, and ends with net income. The template above builds it in three layouts (annual, monthly with twelve month columns, and a two-year comparison) and then prints it in the standard profit and loss account format. The example is a trading business in Riyadh; replace its lines with your own figures.
Sales of SAR 500,000 and cost of sales of SAR 300,000 give gross profit of SAR 200,000 (40%). After SAR 120,000 of operating expenses, operating profit is SAR 80,000 (16%), and after other income, finance costs and zakat, net income is SAR 74,500, or 14.9% of sales.
How to use the income statement template
- On the Annual income statement tab, enter each line as it appears in your books and its amount in SAR, always as a positive number.
- Pick the section for each line: revenue, cost of sales, selling, administrative or other. The section decides whether the amount is added or deducted.
- Read the summary cards: gross profit, operating profit, net income and the two margins.
- Use the Monthly tab to follow results month by month, and Two-year comparison to set this year against last year.
- Open Print format, add the company name and year end, and download a PDF or Word file. The Excel file comes from the sheet tabs with every formula in place.
What goes in each column
| Column | What to enter |
|---|---|
| Line item | The account or group of accounts, such as Merchandise sales or Administrative salaries. |
| Statement section | One of eight sections. A line with no section is shaded and left out of every total. |
| Amount | The total for the whole period, not a balance on one day. |
| Share of sales | Calculated: the amount divided by total revenue. |
What is an income statement?
The income statement, also called the profit and loss statement, answers one question: did the company make money in this period, and how much? It reports performance over a month, quarter or year, while the balance sheet describes the company on a single date. Owners use it to see which costs eat into profit, banks ask for it with financing requests, and accountants prepare it at every month-end close.
Income statement elements, line by line
| Element | What it includes | Example (SAR) |
|---|---|---|
| Revenue | Sales and service income after returns and discounts | 500,000 |
| Cost of sales | Cost of goods sold or of services delivered | 300,000 |
| Gross profit | Revenue − cost of sales | 200,000 |
| Operating expenses | Selling and marketing 52,000; general and administrative, including depreciation, 68,000 | 120,000 |
| Operating profit | Gross profit − operating expenses | 80,000 |
| Other income and costs | Gain on an asset sale 4,000; finance cost 6,500 | 77,500 before zakat |
| Zakat and income tax | Zakat for the year, or income tax on a foreign partner's share | 3,000 |
Net income here is SAR 74,500, the figure that moves into retained earnings on the balance sheet. A services business usually has no cost of sales, so gross profit equals revenue; the services example shows revenue of SAR 360,000 and net income of SAR 118,500.
Profit and loss account format
The usual profit and loss account format is vertical: company name, "Income statement for the year ended…", the lines from revenue down to net income with subtotals in bold, then the preparer's and approver's signatures. That is the layout of the Print format tab. In a trading business, the first part down to gross profit is the trading account; the part from gross profit to net income is the profit and loss account. The difference from the balance sheet is time: one measures a period, the other a single date, and each has its own template.
Statement of comprehensive income
The statement of comprehensive income adds items that do not pass through profit or loss, such as revaluation differences on some investments or assets. Most small companies have none, so comprehensive income equals net income. If you have them, pick the Other comprehensive income section and switch to advanced mode to see the total and its lines on the printed statement.
Monthly and comparative formats
In the monthly layout, the bottom line gives net income for each month. December has the highest sales at SAR 55,000 but net income of only SAR 6,975 because zakat and a finance instalment fall in it, while July reaches SAR 8,400 thanks to the vehicle sale. Average monthly net income is SAR 6,208.33. In the comparison, revenue grows 16.3% from SAR 430,000 to SAR 500,000 and net income rises from SAR 45,200 to SAR 74,500, up 64.8%, because cost of sales grew more slowly than sales and gross margin moved from 38% to 40%.
Common mistakes
- Confusing sales with profit: SAR 500,000 of sales is not SAR 500,000 of profit.
- Recording owner drawings or dividends as an expense; they reduce equity only.
- Expensing the full cost of a vehicle or equipment instead of its yearly depreciation.
- Entering an expense as a negative number, so it is deducted twice; keep amounts positive and let the section set the sign.
Accounting and regulatory notes
The template follows the general income statement format and does not replace statements prepared under the standards endorsed in Saudi Arabia by the Saudi Organization for Chartered and Professional Accountants (SOCPA). Zakat and income tax are shown at the amount you take from your return with ZATCA; the template does not calculate them. Statements filed with authorities may need an external auditor's report; check the current requirements for your company [verify].
When month-end close waits on scattered spreadsheets
Microtec accounting software is built for businesses in Saudi Arabia and brings sales, purchasing, inventory, finance and HR into one place.
Frequently asked questions
Is an income statement the same as a profit and loss account?
Yes in everyday use: the profit and loss account is another name for the income statement. Older textbooks use the term for the part after gross profit, which follows the trading account.
Does the income statement include zakat?
Yes. Zakat or income tax appears after profit before zakat and tax and before net income. In the example, profit before zakat is SAR 77,500, zakat is SAR 3,000 and net income is SAR 74,500.
How often is an income statement prepared?
At least once a year with the annual financial statements, and many companies prepare one every month at close to track margins. The monthly layout keeps all twelve months and the year total in one file.
What is the difference between gross profit and net income?
Gross profit is sales less cost of sales only (SAR 200,000 in the example). Net income is what remains after all operating expenses, finance costs and zakat (SAR 74,500).
How do I prepare an income statement from a trial balance?
Move the revenue and expense account balances from the trial balance into the template, each in its section, and leave asset and liability accounts for the balance sheet. Then check that net income matches the period profit in your books.