Business glossary
Income statement
A report of revenue, expenses and profit or loss over a period.
Example
A business reports $10,000 of revenue, $4,000 of direct costs and $3,000 of operating expenses over a month. Before other items and taxes in this simplified example, profit is $3,000.
How it differs from related terms
An income statement covers a period; a balance sheet covers a date. Under accrual accounting, revenue and expenses do not necessarily occur when money enters or leaves the bank, so profit and cash movement can differ.
Frequently asked questions
What is an example of income statement?
A business reports $10,000 of revenue, $4,000 of direct costs and $3,000 of operating expenses over a month. Before other items and taxes in this simplified example, profit is $3,000.
How should income statement be interpreted?
An income statement covers a period; a balance sheet covers a date. Under accrual accounting, revenue and expenses do not necessarily occur when money enters or leaves the bank, so profit and cash movement can differ.