income statement

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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]