Financial Terms / income statement

# Understanding Income Statement Revenue & Expenses

The income statement is an essential financial statement that tracks a company's revenue, expenses, gains, and losses to calculate their net income.

## Formula

``IS = Revenue - Expenses - Gains and Losses``

## How do I calculate the income statement?

`In order to calculate an Income Statement, you should start by understanding the three key elements of it: revenue, expenses, gains, and losses. Revenue is the total amount of money a company has earned from its business activities during the accounting period, while expenses are the cost of goods and services used to generate revenue. Gains and losses are the difference between the cost of goods sold and the selling price of those goods. To calculate an Income Statement, you can use tools such as Sourcetable to create a formula that will `add up the revenue, subtract the expenses, and then subtract any gains and losses.` The resulting number will be your company's net income.`

## What is an income statement?

`An income statement is one of the three main financial statements.`

## What does an income statement show?

`An income statement shows a company's revenues, expenses, gains and losses over a period of time.`

## How is an income statement used?

`An income statement is used to understand and analyze a company's financial performance over a period of time.`

## What formula is used to calculate net income?

`The formula for net income is `Net Income = Revenues - Expenses - Gains + Losses``

## Key Points

How do I calculate income statement?
`IS = Revenue - Expenses - Gains and Losses`
Income Statement
An income statement is a financial document that shows a company's revenues and expenses over a certain period of time. It shows how much money the company has made and how much money it has spent. The income statement is used to assess the financial health of a business.
Revenue
The income statement shows how much revenue the company generated during a period. This is the total amount of money that the company has earned from selling its products and services. It includes sales, fees, interest income, and other sources of income.
Expenses
The income statement also shows the company's expenses. This includes the costs associated with producing and selling the company's products and services, such as salaries, rent, utilities, and advertising. It also includes any other costs that the company has incurred in order to generate revenue.
Profit
The income statement shows the company's profit, which is the difference between the company's revenues and expenses. This number is an indicator of the company's financial performance. If the company's expenses are greater than its revenues, then the company has made a loss.
Analysis
The income statement can be used to analyze the financial performance of a company. It can be used to identify areas where the company is spending too much money, or areas where it is not generating enough revenue. This information can be used by managers to make informed decisions about how to improve the company's finances.