Hi, my name's Miranda Chook, a CPA. Preparing income statements would follow this broad and major steps. First you would start with your revenue or sales, and then the next big category would be the cost of goods sold which would include the cost of producing or manufacturing, transporting and storing the inventory that you have for sale. That, then you will arrive at your gross margin. So the next step in preparing your income statements would be any other income and other types of expense that the company has realized. This would include things such as you know, your salaries, the sales department and then you would arrive at net operating income. And most companies then will then launch they have an other operating income before interests and before taxes, so then your next categories would be interest on debt and your provision for income taxes. And then finally, you would arrive at your net income.