INCOME STATEMENT Meaning and
Definition
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An income statement, also known as a profit and loss statement or statement of earnings, is a financial report that showcases the revenue, expenses, and profit generated by a company during a specific period. It provides a comprehensive overview of the company's financial performance and helps assess its ability to generate profit and sustain growth.
The income statement consists of various sections that present the company's financial data in an organized manner. First, it presents the revenue or sales generated by the company during the specified period. This revenue may come from the sale of products, services, or any other income sources. Following the revenue section, the income statement includes the cost of goods sold (COGS), which represents the direct costs associated with producing or delivering the goods or services sold.
After deducting the COGS from the revenue, the income statement further lists all the operating expenses incurred by the company. These expenses include wages, rent, utilities, marketing expenses, and other costs necessary to run the business. By subtracting the total operating expenses from the revenue minus COGS, the income statement calculates the operating income or operating profit.
Additionally, the income statement incorporates non-operating income or expenses, such as interest income or expense, gains or losses from investments or asset sales, and taxes. After accounting for all these elements, the statement arrives at the net income or net profit, which represents the total earnings generated by the company for the specified period.
In conclusion, an income statement is a financial document that illustrates a company's revenue, expenses, and overall profitability. It enables stakeholders, such as investors, creditors, and management, to assess the financial health and performance of the company.
Common Misspellings for INCOME STATEMENT
- uncome statement
- jncome statement
- kncome statement
- oncome statement
- 9ncome statement
- 8ncome statement
- ibcome statement
- imcome statement
- ijcome statement
- ihcome statement
- inxome statement
- invome statement
- infome statement
- indome statement
- incime statement
- inckme statement
- inclme statement
- incpme statement
- inc0me statement
Etymology of INCOME STATEMENT
The term "income statement" originated in the field of accounting and finance. The word "income" comes from the Latin word "incommodus", which means "not suitable" or "inconvenient". In this context, it refers to the inflow of money or revenue generated by a business or individual.
The word "statement" is derived from the Latin word "stare", meaning "to stand" or "to be established". In the context of accounting, it refers to the formal presentation or declaration of financial information.
Therefore, the term "income statement" emerged to describe the formal document that presents the revenue, expenses, and resulting net income or loss of a business or individual over a specific period.
Similar spelling words for INCOME STATEMENT
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