An income statement reports a company’s revenues and expenses for a given period of time. It essentially shows how much money the business has made and spent over the course of a financial year. The income statement includes revenue from sales, as well as costs related to running the business, such as labor, rent, and other expenses. By examining the difference between revenue and expenses, the income statement provides valuable insight into the profitability of a business. Knowing how much money is coming in and going out gives entrepreneurs an idea of where they need to adjust their operations in order to maximize profits. With this knowledge, companies can make informed decisions that increase their bottom line.