Income Statement
A financial statement summarizing revenues, expenses, and profits over a specific period of time.
Also: P&L · statement of operations
Definition
An income statement (also called a profit and loss statement, or P&L) is a financial statement that shows a company's revenues, expenses, and profits or losses over a specified period (quarter or year). It begins with revenue (top line), subtracts cost of goods sold (COGS) to get gross profit, then deducts operating expenses (SG&A, R&D), resulting in operating income (EBIT). After accounting for interest and taxes, it arrives at net income (bottom line). The income statement shows operational performance over time.
Example
“A retailer's income statement shows $10M in revenue, $6M in COGS (gross profit $4M), $2M in operating expenses (operating income $2M), and $1.5M in net income after tax.”
Usage Examples
- 1
“The team applied income statement best practices to improve their accounting outcomes significantly.”
- 2
“Understanding income statement is essential for anyone building a career in Finance.”
When & How to Use
Use 'Income Statement' when working in Accounting contexts where an income statement (also called a profit and loss statement, or p&l) is a financial statement that shows a company's revenues, expenses, and profits or losses over a specified period (quarter or year).
- ▸Applying income statement principles during a accounting project or initiative
- ▸Explaining income statement to a junior team member or stakeholder unfamiliar with Finance
- ▸Evaluating options or proposals using income statement as a decision-making criterion
Etymology & Origin
The term 'Income Statement' derives from professional usage and entered Finance professional usage as the field formalised in the 20th century.
History & Evolution
The concept of income statement has evolved alongside Finance. Early practitioners relied on informal methods; structured approaches emerged with the professionalisation of accounting in the mid-20th century. Today, income statement is a standard part of Finance practice globally.
Synonyms
- profit and loss statement
- P&L
- earnings report
- statement of operations
Images
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Related Terms
- balance-sheet
- cash-flow-statement
- ebitda
- gross-margin