Editing Income statement (section)

{{Short description|Type of financial statement}}
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[[File:Sankey Diagram - Income Statement.jpg|alt=Sankey Diagram - Income Statement (by Adrián Chiogna)|thumb|
Sankey Diagram - Income Statement (by Adrián Chiogna)]]An '''income statement''' or '''profit and loss account'''<ref name="CUP">Professional English in Use - Finance, Cambridge University Press, p. 10</ref> (also referred to as a '''''profit and loss statement''''' (P&L), '''''statement of profit or loss''''', '''''revenue statement''''', '''''statement of financial performance''''', '''''earnings statement''''', '''''statement of earnings''''', '''''operating statement''''', or '''''statement of operations''''')<ref name="helfert-a">{{Cite book
  | last       = Helfert
  | first      = Erich A.
  | author-link = Erich A. Helfert
  | title      = Financial Analysis - Tools and Techniques - A Guide for Managers
  | chapter    = The Nature of Financial Statements: The Income Statement
  | url        =https://archive.org/details/financialanalysi00helf_497
  | url-access = limited
  | year       = 2001
  | publisher  = [[McGraw-Hill]]
  | page       = [https://archive.org/details/financialanalysi00helf_497/page/n64 40]
  | isbn = 9780071378345
 }}</ref> is one of the [[financial statement]]s of a company and shows the company's [[revenue]]s and [[expense]]s during a particular period.<ref name="CUP"/>

It indicates how the [[revenue]]s (also known as the ''“top line”'') are transformed into the [[net income]] or net profit (the result after all revenues and expenses have been accounted for). The purpose of the income statement is to show [[Management|managers]] and [[investor]]s whether the company made money (profit) or lost money (loss) during the period being reported.

An income statement represents a period of time (as does the [[cash flow statement]]). This contrasts with the [[balance sheet]], which represents a single moment in time.

[[Charitable organizations]] that are required to publish financial statements do not produce an income statement. Instead, they produce a similar statement that reflects funding sources compared against program expenses, administrative costs, and other operating commitments.  This statement is commonly referred to as the ''statement of activities''.<ref>{{cite web |url=http://www.1800net.com/nprc/fasb117.html#2 |title=ANALYSIS OF FASB 117 (Financial Accounting Standards Board) "FINANCIAL STATEMENTS OF NOT-FOR-PROFIT ORGANIZATIONS" 
}}</ref>  Revenues and expenses are further categorized in the statement of activities by the donor restrictions on the funds received and expended.

The income statement can be prepared in one of two methods.<ref>{{cite book | last = Warren | first = Carl | title = Survey of Accounting | publisher = South-Western College Pub | location = Cincinnati | year = 2008 | isbn = 978-0-324-65826-2 | pages = [https://archive.org/details/surveyofaccounti0000warr/page/128 128–132] | url = https://archive.org/details/surveyofaccounti0000warr/page/128 }}</ref> The Single Step income statement  totals revenues and subtracts expenses to find the bottom line. The  Multi-Step income statement takes several steps to find the bottom line: starting with the [[gross profit]], then calculating [[operating expenses]]. Then when deducted from the gross profit, yields income from operations.

Adding to income from operations is the difference of other revenues and other expenses. When combined with income from operations, this yields income before taxes. The final step is to deduct taxes, which finally produces the net income for the period measured.