What Is an Income Statement?
An Income Statement is an important formal financial record prepared by a business. It is a summary of the financial operations’ results of a company, detailing the revenues earned and the expenses incurred in its operating activities over a set period of time. This period may be a quarter, a month, or, usually, a year. The concept may seem overwhelming at first, but the records provide valuable information for the company. Also known as profit and loss statements, they measure how the business has performed by looking at the total revenues and comparing that to the total expenses. The difference between income and expenses results in a net income. If the net income amount is positive, then the result for the period is actual income, and if the result is negative, it means that the company did not make a profit and resulted in a loss. If you want to analyze your operating activity over a particular period to see if a profit or loss was made by your business, you can download our fillable income statement templates below.
Income statements are one of three key financial statements used by all companies, from small businesses to large corporations. When used together, the income statement, the balance sheet, and the statement of cash flows provide a clear picture to assess the financial position of the company. The information of these financial statements is essential for a business and is a helpful tool for analysis, planning, and decision-making.