Income Statement Definition

An income statement is a report that summarizes a business’s expenses and income over a specific period of time.

Income Statement Extended Definition
The income statement measures a business’s performance and, over time, can predict patterns of revenues and expenses. Also known as a profit and loss statement (P&L), income statements show the profitability of your company.

Parts of an income statement include:

• Revenue (income)
• Cost of goods sold (COGS)
• Gross profit
• Operating expenses
• Taxes and interest
• Net income or net loss (aka your bottom line)

Banks and investors refer to a company’s income statement to evaluate a business’s solvency.

Related Articles
What Is an Income Statement?
P&L Management for Small Businesses

Last Updated By

Rachel Blakely-Gray | Apr 12, 2023