Income Statement Definition

An income statement is a financial statement that reports a company’s financial performance over a specific period of time. The income statement can be prepared in one of two ways: the single-step format, or the multi-step format.

The single-step income statement simply lists all of the revenue and expense items for a given period, with net income being the difference between the two. The multi-step income statement begins with gross profit, which is then followed by operating expenses, interest expense, taxes, and finally net income.

The income statement is one of three primary financial statements used by businesses (the other two being the balance sheet and cash flow statement). It is important to note that the income statement does not include information on a company’s current assets or liabilities.