The Income statement

Definition:
-An income statement is one of the three major financial statements, along with the balance
sheet and the cash flow statement, that report a company’s financial performance over a
specific accounting period.
-An income statement shows the operating revenues and expenses of a company for a year. It
shows whether a company has made a profit or loss during that period.It is used with the
balance sheet to find out about the financial position of a company.
-An income statement provides valuable insights into a company’s operations, the efficiency
of its management, underperforming sectors, and its performance relative to industry peers.
_ Numbers written in brackets show negative numbers.
_The income statement focuses on four key items: revenue, expenses, gains, and losses

Importance of an income statement

-An income statement helps business owners decide whether they can generate profit by increasing revenues, by decreasing
costs, or both. 

It also shows the effectiveness of the strategies that the business set at the beginning of a financial period. The business
owners can refer to this document to see if the strategies have paid off. Based on their analysis, they can come up with the
best solutions to yield more profit.