Entrepreneur Badge Challenge — 10 minutes
💡 The Big Idea
Every entrepreneur needs to know one very important thing:
Did my business make money?
An income statement helps answer that question. It shows the money a business earned (revenue) and the money it spent (expenses) during a certain period.
The basic formula is:
Revenue − Expenses = Net Income
For a small business, an income statement can be surprisingly simple.
🕵️ The Challenge: Be a Business Detective
Imagine your group has just bought a small business. The previous owner hands you this income statement:
| Sunny Side Smoothies — One Month | Amount |
|---|---|
| Revenue | $2,400 |
| Smoothies sold | $2,400 |
| Expenses | |
| Fruit, milk & other ingredients | $700 |
| Cups & straws | $200 |
| Advertising | $150 |
| Booth rental | $300 |
| Other expenses | $100 |
| Total Expenses | $1,450 |
| Net Income | $950 |
🔎 Can You Crack the Case?
Work together to answer these questions. Don’t worry if you aren’t sure—talk it out!
- How much money did Sunny Side Smoothies bring in?
- How much did the business spend?
- Did the business make or lose money? How much?
- Which expense do you think the owner would have the easiest time reducing? Why?
- Here’s the entrepreneur question: If you owned this business, what could you do to increase the $950 profit?
⚡ Bonus Challenge
Suppose you found a way to increase revenue by $300 without increasing expenses.
What would the new net income be?
🎯 What Entrepreneurs Should Remember (for the test!)
An income statement doesn’t have to be complicated. At its heart, it answers three questions:
💰 How much came in?
💸 How much went out?
📈 Did we make money?
A successful entrepreneur doesn’t just ask, “How much did I sell?”
They also ask: “How much did I actually keep?”
Want to learn more? Check out Income Statement: Example, Format and Explanations from Accounting-Basics-for-Students.
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