Income Statement

Posted in Finance, Accounting and Economics Terms, Total Reads: 4237

Definition: Income Statement

Income Statement is a financial statement which tells about the performance of company(financial) over a specific period of time like a quarter, year, 4 months, half yearly etc. It is also called a Profit and Loss(P/L) statement because an income statement shows profitability or loss of a business.

Income statement along with Balance Sheet and Cash Flow statement is the most important financial statement in Finance and Accounting.

Major parts of an income statement include Revenues and gains from primary as well as other activities of a company. The other important part is the Losses and Expenses.

If we think income of anyone you will think revenue-losses, same is the concept of Income statement. 

Now let us see 

1) Revenues & Gains

2) Expenses & Losses


Revenue can be divided as per Operating and Non Operating Gains. Operations gains are the ones which come from direct line of business operations like Revenue from selling products/services. Non Operating Revenue can be like Sales of old Assets, subsidiary etc or any other source which is not directly linked to main primary line of business.


Expenses like Revenues can also be again from Operating(primary) and Non Operating(Secondary) activities. COGS is a primary expense. Now may be an Interest paid to bank for a loan is secondary expense.


As far as formula is concerned it is simply : (Revenues+Gains)-(Expenses)

A very basic format can be

Income StatementQuarter 2

More commonly used format is 

Income Statement Quarter 2
Sales 50000$
COGS (30000$)
Gross Profit 20000$
Operating Expenses
Marketing Expense(3000$)
Total Op Expenses(5400$)
Asset Sale2000$
Total Non Op4000$
Net Income18600$

Net income can be further adjusted for Profits and Interest.

Hence, this concludes the definition of Income Statement along with its overview.

Browse the definition and meaning of more terms similar to Income Statement. The Management Dictionary covers over 7000 business concepts from 6 categories. This definition and concept has been researched & authored by our Business Concepts Team members.

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