The Income Statement, also called "Profit and Loss Statement", summarizes the financial performance or results of operations of a business for a particular period of time.
Financial performance, or results of operations, is primarily measured by computing the net income. Net income is equal to all revenues earned minus all expenses incurred.
Revenue accounts include Sales, Service Revenues, and Other Income such as Rent Income, Royalty Income, Gain on Sale of Fixed Asset, etc.
Expenses include Cost of Sales; Operating Expenses such as Rent Expense, Salaries and Wages, Utilities, etc; and Finance Costs such as Interest Expense.
Revenues come from several sources; and expenses are incurred for different purposes. The following summarizes and explains the items found in an income statement.
Expenses can be grouped into the following categories: