A profit and loss income statement, commonly known as both a profit and loss statement and an income statement, is a financial statement that summarizes the revenues, costs, and expenses accrued by a business during a specific period of time, typically during a year or year-to-date period.
The profit and loss statement works by taking the revenue that is being generated by a business, or the "top line", and subtracting the costs associated with doing business, which may include things like operating expenses and the costs of goods sold. The difference between these two numbers is referred to as the net income, or "bottom line". It acts as a way to track financials in a way that monitors profitability, and allows business owners to ensure that revenue is outpacing company expenses.
