The income statement (statement of income, statement of earnings, statement of operations, statement of comprehensive income) reports the accountant’s primary measure of performance of a business, revenues less expenses during the accounting period. The income statement includes three elements:
- Revenues: the amounts expected to be received for goods or services that have been delivered to a customer, whether the customer has paid for the goods or services.
- Expenses: the dollar amount of resources the entity used to earn revenues during the period, including income tax expense.
- Net Income: the excess of total revenues over total expenses.
The income statement equation that describes their relationship is: Revenue - Expenses = Net Income.
[Last updated in March of 2022 by the Wex Definitions Team]