Understanding the Income Statement and Balance Sheet

Trio Ledger builds two financial statements from the transactions and Starting Balances in your books. They answer different questions.

Income Statement: activity for a period

The Income Statement shows business income, expenses, and the resulting profit or loss over a period of time.

For example, an Income Statement from January 1 through March 31 includes income earned and expenses recorded during those dates. Owner money, loan principal, and transfers do not become income or expenses merely because cash moved.

Balance Sheet: position as of a date

The Balance Sheet shows what the business has, what it owes, and owner/equity amounts at a particular date. Bank balances, equipment and property, credit cards, loans, and accumulated results from the business all contribute to this statement.

“For the period January 1 through March 31” describes activity across a span of time. “As of March 31” describes the business's position at the end of that day.

Report periods in Trio Ledger

Open Reports and choose one period for both statements. The available presets are Current year, This quarter, Last quarter, Year to date, Last calendar year, and Custom.

The selected start and end dates define the Income Statement period. The Balance Sheet uses the selected ending date as its as of date. For example, a custom period of February 1 through April 30 produces an Income Statement for those dates and a Balance Sheet as of April 30.

You can view both statements on screen, download either one or both as PDF files, and print them. If a report does not look right, review Starting Balances and transactions marked Needs Review before changing the report itself.

Tax Reporting

Your Income Statement and Balance Sheet are also important records used in preparing business tax returns. Keeping them accurate throughout the year can make tax preparation much easier.