Accounting 101: Income Statement

What is an Income Statement?

It is the financial statement which expresses your operations or activities in financial terms for a given period. It is also called as Profit and Loss Statement or simply, PnL.

The elements of an Income Statement are Revenue or Gross Income, Costs or Expenses and Net Income or Net Profit.

The Sales, Rentals we earn or Professional Fees paid by our clients is the so-called Revenue or Gross Income.

The Costs or Expenses are those we expended or the spendings.

The Net Income or Net Profit is what remained when we subtract the Costs or Expenses from the Revenue or Gross Income.

The formula of an Income Statement is as follows:

Revenue – Expenses = Net Income