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Income Statement

What is an Income Statement in Business?

An income statement (also called a profit and loss statement or P&L statement) is a financial document that shows a company's revenues, expenses, and profits over a specific period of time, such as a month or a year. It is used to understand the company's financial performance and determine whether it is making a profit or a loss.

The income statement typically includes three main categories: revenues, which are the money that the company receives from selling its products or services; expenses, which are the costs associated with running the business, such as salaries, rent, and supplies; and net income, which is the difference between revenues and expenses. If revenues are greater than expenses, the company has a net profit. If expenses are greater than revenues, the company has a net loss.

An income statement is an important tool for understanding a company's financial performance and making informed business decisions. It is often used by investors, analysts, and management to evaluate the company's profitability and financial health.

So, an income statement is a financial document that shows a company's revenues, expenses, and profits over a specific period of time, and it is used to understand the company's financial performance and determine whether it is making a profit or a loss.

An income statement is one of the three major financial statements that report a company's financial performance over a specific accounting period.


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