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.

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Last Updated By

Rachel Blakely-Gray | Apr 12, 2023

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