Income Statement Concept Definition

The income statement is one of a company s core financial statements that shows their profit and loss over a period of time.

Income statement concept definition. Balance sheet while an income statement and balance sheet are both key financial statements for companies they are very different. The income statement also called a profit and loss statement is a report made by company management that shows the revenue expenses and net income or loss for a period. Purpose of the income statement. Income statements are used to evaluate the overall performance of a company during a period such as a fiscal year.

What is an income statement. Balance sheet income statement statement of owner s equity and statement. There could be several reasons for creating a financial statement and it ultimately depends on the end user. For instance an annual statement would be very useful for an investor or a creditor to judge the annual performance of a company.

So the income statement shows total revenue and expenses for a specified period of time such as a fiscal year. Income statement purpose 2 through the income statement the reader can comprehend how profitable the business is and what are the various business activities that the company has undertaken. The income statement is one of the main four financial statements that are issued by companies. Shows that the company performed well as it made a net profit of 18 650 in the year 2018.

This income statement of teddy s toy shop inc. An income statement is one of the three major financial statements that reports a company s financial performance over a specific accounting period. Income statement or otherwise called as statement of profit and loss is the summary prepared by the company s management reporting the revenues expenses gains and losses for the particular financial year simply put it portrays the final result of the company s operations over a period.