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Income Statement: Definition and Meaning
Definition
An income statement is a financial statement that reports revenue, expenses, and profit or loss over a specific period.
Why It Matters
The income statement helps management understand operating results for a month, quarter, or year. It may show revenue, direct costs, gross profit, operating expenses, interest, taxes, and net income or loss.
Reviewing an income statement with comparative periods, budget figures, and supporting schedules can help management identify trends and questions that need attention.
Example
A June income statement reports sales, cost of sales, gross profit, overhead, and net income for the month.
Related Terms
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