Income Statement Basics - Revenue, 

Expenses, Costs

If you look at the balance sheet  you learn about assets, liabilities and equity. If you move on to the income statement, you learn about revenue, expenses, and costs.

Revenue is all the income a business receives in selling its products or services. Costs, also called cost of goods sold, is all the money a business spends to buy or manufacture the goods or services it sells to its customers. The Purchases account tracks goods purchased. Expenses are all the money that is spent to run the company that is not specifically related to a product or service being sold. An example of an expense account is Salaries and Wages.

A bookkeeper is responsible for identifying the accounts in which transactions should be recorded. For example, if the business makes a cash sale to a customer and your business uses double-entry bookkeeping, you would record the cash received in the asset account called Cash and the sale would be recorded in the revenue account called Sales.

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