At its core, an income statement structure is a summary of all the revenues and expenses that a business has over a certain period of time. It’s an important document, because it shows how profitable a business is – or isn’t – over a chosen period. Business owners use this document to see what areas need improvement, where money should be allocated, and whether or not their strategies are paying off. Essentially, it’s a snapshot of the company’s financial performance.

The statement typically contains four components: revenues, costs, expenses, and profit (or loss). Revenues include any money earned from sales of goods and services and costs indicate the cost of goods sold (COGS) or other necessary overhead expenses incurred in order to generate those revenues. After the COGS is subtracted from revenues, profits or losses arise. This is known as the bottom line and indicates how much money was generated by the business during the period in question.