Explanation of "Income Statement"
Definition: An income statement is a financial document that shows how much money a business made (revenue) and how much it spent (expenses) over a specific period, like a month, a quarter, or a year. The result of this statement tells you whether the business made a profit (more money earned than spent) or a loss (more money spent than earned).
Usage Instructions:
You usually use the term when discussing business finances.
It is often prepared monthly, quarterly, or annually.
It is important for business owners, investors, and accountants to understand how well a company is performing.
Example:
Advanced Usage:
You might hear phrases like "net income" or "operating income" when discussing income statements. Net income is the final profit after all expenses are deducted.
Businesses often compare income statements from different periods to analyze growth or decline.
Word Variants:
Income (noun): The money received, especially on a regular basis, for work or through investments.
Statement (noun): A clear expression of something in speech or writing.
Related term: Profit and Loss Statement (another name for income statement).
Different Meanings:
While "income statement" primarily refers to financial documents in business, the words "income" and "statement" can have other meanings: - Income can refer to any money received, not just from business (like salaries or gifts). - Statement can also refer to a declaration or an expression of opinion.
Synonyms:
Idioms and Phrasal Verbs:
Summary:
The income statement is essential for understanding a business's financial health.