An income statement is a financial statement that shows a company’s revenues, expenses, and profits over a specific period of time. It is also sometimes called a profit and loss statement or statement of operations. The income statement provides information about a company’s financial performance, including the costs of running the business, the income earned from its operations, and the net profit or loss for the period. This information is useful for both internal decision-making and external reporting to investors, creditors, and other stakeholders.
The main parts of an income statement are revenues, expenses, and net income. Revenues, also known as “sales” or “top line,” represent the money earned by the company through the sale of goods or services. Expenses, also known as “costs” or “bottom line,” represent the costs associated with generating those revenues, such as the cost of goods sold, operating expenses, and taxes. Net income, also known as “profit” or “net profit,” is the difference between revenues and expenses, and represents the amount of money the company has made or lost over the period.