Income Statement Definition And Format

Balance sheet income statement statement of owner s equity and statement.

Income statement definition and format. The income statement format above is a basic one what is known as a single step income statement meaning just one category of income and one category of expenses and prepared specifically for a service business. The income statement is one of a company s core financial statements that shows their profit and loss over a period of time. The income statement format is revenues expenses and profits or losses of an entity over a specified period of time in other words it is a description of the entities profitability over a period of time usually quarterly or annually. The income statement is one of the main four financial statements that are issued by companies.

Instead of calculating the bottom line through a single step the income statement makes multiple calculations. The income statement also called a profit and loss statement is a report made by company management that shows the revenue expenses and net income or loss for a period. Examples of service businesses are medical accounting or legal practices or a business that provides services such as plumbing cleaning consulting design etc. The basic objective of the income statement is to describe the income achieved by the reporting entity during a specific accounting period.

It calculates other profit metrics along the way before arriving at net income net loss. Experience has shown that the rules for measuring the amount of income are complex and far from unanimously accepted among users and preparers. The multi step income statement is a format that shows the calculation to net income net loss through multiple steps.