The easy one to understand is the Income Statement. This starts at the top with your sales, or what you like to call your sales. Me? I don’t think you’ve made a sale until the money is in the bank! But more of that later.
Then there might be an item called Cost of Sales, or Cost of Goods Sold. This is the total of all of the direct costs incorporated in the thing that you sold, so it would include, for instance, raw materials, transport of stock into your stores, consumables like paint, packaging, etc. Cost of Sales is then deducted from sales and the result is called Gross Profit. In a nutshell, this is the difference between what your stuff cost and what you sold it for, your markup, in other words.
