5.2.1. The Income Statement 

The income statement is a summary of financial information for a defined accounting period and shows whether the business made or lost money during the period reported. For this reason, the income statement represents valuable information to all stakeholders of the operation. Owners can see the effectiveness of the managers; investors are provided with indicators of whether their investment is a good one; managers can use this report to determine their effectiveness and ability to run a profitable operation.

The income statement shows three main types of information about a company:

• Revenue that is earned once you sell a product or provide a service.

• Expenses incurred to generate the revenue and manage the business that has been recognized.

• Net income or the profit that remains after you have deducted your expenses.