Key Features Of An Income Statement

The format of the income statement components allows for dissecting the revenues expenses operating income and profits of an entity.

Key features of an income statement. It presents the results of a company s operations for a given reporting period. The end product of these transactions is net income or loss. Along with the balance sheet cash flow statement and the statement of changes in owners equity the income statement is also one of the essential means of financial reporting. The income statement is one of the important primary financial statements provided by organizations.

The purpose of the income statement is to provide the financial earnings performance of the entity over a specific period of time. The statement is great for analysts to use as a financial performance indicator of a company over a. What is income statement. It is also referred to as a profit and loss statement or earnings statement.

The income statement shows the business s income expenses gains and losses. The income statement totals the debits and credits to determine net income before taxes the income statement can be run at any time during the fiscal year to show a company s profitability. Some also call the income statement a statement of profit and loss or p l. The income statement is a key financial report which shows a company s sales or revenue less expenses for the period in question.

The income statement contains several subtotals that can assist in. Income statement and balance sheet overview. Generally accepted accounting practices gaap also refer to this report as statement of income because the income statement shows. The purpose of the income statement is to show the reader how much profit or loss an organization generated during a reporting period this information is more valuable when income statements from several consecutive periods are grouped together so that trends in the different revenue and expense line items can be viewed.

The income statement or profit and loss report is the easiest to understand it lists only the income and expense accounts and their balances. These records show the company s ability to both generate profit and manage its expenses.