An income statement is an economic report that illustrates a company’s revenues, expenses, and profits for a time period. Although profit-and-loss statements more accurately illustrate the profitability of a company, an income statement is useful for summarizing what happened in the past.
There are three major elements that make up the income statement:
Revenues are the amount paid for goods and services during a certain period. We recorded expenses as the amount spent on things like salaries, rent, wages, and utility payments. Profits are the income left over from revenue and expenses.