An income statement, known as a profit and loss statement, adds an itemized list of all your income and revenues and subtracts a detailed of all your expenses to come up with a profit or loss for the period.
An properly prepared income statement allows you to…
• Track income and expenses so that you can determine the operating performance of your business.
• Determine how your business is performing in relation to your budget. Are you over-budget or under-budget?
• Determine your income tax liability.