An income statement is a business’s financial statement that gives the income results from operations and non-operations activity. It is also called a profit and loss statement or a statement of operations.
It is one of the major financial statements in the world of corporate accounting. The others are the balance sheet, the statement of cash flows, and the statement of shareholder’s equity. The income statement will included revenues and gains from investments and “secondary operations”, but it will not include cash flows in or out which may stem from other accounting periods.
The cash flows will appear on the statement of cash flows. The income statement will show all major activity for the period in question, which could be a month, quarter, year, or other period. After adding in the sources of revenue for the period and subtracting the expenses and losses, the bottom line of the income statement is known as the net income, or earnings.
This is the reason profit and loss are sometimes called the “bottom line.”
What is Profit and Loss (P&L) Statement?
What is a Cash Flow Statement?