An income statement, also known as a profit and loss account, is a financial statement that shows a companys revenues and expenses during a particular period. It indicates how the revenues are transformed into the net income or net profit, which is the result after all revenues and expenses have been accounted for. The purpose of the income statement is to show managers and investors whether the company made money (profit) or lost money (loss) during the period being reported. An income statement represents a period of time, usually a quarter or a year, and it contrasts with the balance sheet, which represents a single moment in time.

The income statement is one of the three major financial statements, along with the balance sheet and the cash flow statement, that report a companys financial performance over a specific accounting period. It focuses on the revenue, expenses, gains, and losses of a company during a particular period. The income statement is an integral part of the company performance reports that must be submitted to the U.S. Securities and Exchange Commission (SEC) .

The income statement is a key document for managing and building a business and working with bankers, investors, and other partners. It provides valuable insights into a companys operations, the efficiency of its management, underperforming sectors, and its performance relative to industry peers. Income statements may help investors and creditors determine the past financial performance of the enterprise, predict the future performance, and assess the capability of generating future cash flows using the report of income and expenses.

The income statement may have minor variations between different companies, as expenses and income will be dependent on the type of operations or business conducted. However, there are several generic line items that are commonly seen in any income statement, including revenue, cost of goods sold, gross profit, operating expenses, net income, and earnings per share.

In summary, an income statement is a financial statement that shows a companys revenues and expenses during a particular period, and it provides valuable insights into a companys financial performance. It is one of the three major financial statements and is an integral part of the company performance reports that must be submitted to the SEC.