Definition of Income Statement
The income statement is one of the financial statements that represents the comparison of income and expenses of business has generated over a period of time. We often call as profit and loss account because it shows the incomes and expenses and after deducting the expenses from income we get the profit or loss.
When a businessman starts a business he or she will want to assess the financial performance of the business in a given time.
The following is the basic format of the income statement.
Less: Cost of goods sold
Less: Operating Expenses
Profit or loss
With the above format, a businessman can easily put all the revenues and deduct all the expenses from the revenue to get the final profit or loss figure.