A financial statement that shows how much money a company earned and spent over a period of time, such as a quarter or year. It starts with revenue (money coming in) and subtracts expenses to show whether the company made a profit or loss. It answers the question: did the company make money during this period?
A bakery's income statement for January shows revenue of $10,000 from selling bread and cakes. Expenses were $6,000 for flour, labor, and rent. The profit for January was $4,000. If expenses had been $11,000, the company would have lost $1,000 that month.
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