Financials 101 for Startups – Part III: The Income Statement

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The income statement is an important tool that demonstrates how the company is controlling expenses relative to revenue, or controlling expenses if it is a pre-revenue startup. It is generally comprised of three sections: revenue and costs of revenue, operating expenses, and other income/expense.

  • Revenue represents the earnings of the company for the sale of products or rendering of services. Cost of revenue (commonly deemed cost of goods sold or direct costs) immediately follows revenue, as it represents costs that were incurred in order to generate that revenue (the cost of the items sold or the cost of the labor that …read more

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