A SYSTEM OF ACCOUNTING FOR COTTON GINNERIES. 5 
INCOME AND EXPENSE STATEMENT. 
The income and expense statement is an itemized statement of the 
entries made in the loss and gain account, arranged in such a way as 
to set forth clearly the financial results of the operations of the 
periods involved. The items should be obtained from this account, 
and the final balances must agree. 
The following form of income and expense statement will be found 
convenient for exhibiting the operations of the ginnery for either a 
monthly or a yearly period. Wherever possible a monthly state- 
ment of income and expense is advised. 
In the past no standard form of income and expense statement 
has been used; therefore this form should fill a very definite need. 
By its use, not only the stockholders and directors may follow the 
details of the business, but a ready comparison may be made between 
the costs of operation of various periods. 
In preparing this statement the amounts shown as sales and pur- 
chases should be net figures. That is, merchandise returned by the 
buyer should be deducted from the total sales, and merchandise 
returned by the company to the concern from whom it is purchased 
should be deducted from the total purchases. 
In preparing the trading section of the income and expense state- 
ment it will be found that a space is provided for showing the inven- 
tory at the beginning of the period separately from the purchases. 
If the entries have been made in the purchase accounts in the order 
provided, the amount of the inventory (where one existed at the close 
of the previous period) should be the first item in the various pur- 
chase accounts. By deducting this amount from the balance on the 
purchase account, the purchases for the period may be found. 
Special attention is called to the item “Less cost of ginning pur- 
chased seed cotton.’’ The method of ascertaining this amount is 
explained on page 35. 
Special care should be used to see that this item is correctly ascer- 
tained, for in no other way can correct results be obtained. The 
items also appear on the “‘Comparative cost and income analysis,”’ 
page 7. 
The result of this statement, ‘Net profit for year,’’ must agree 
with the balance of the loss and gain account. 
