For most small businesses, a simple income statement is sufficient for internal reporting. Types of Income Statements Simple/Basic Income StatementĪ simple or basic income statement may only include income, expenses, and net profit (or loss). 14.4 Absorption Costing vs Variable Costing Income Statement.14.3 Single-Step vs Multi-Step Income Statement.14.2 Profit and Loss vs Income Statement.14 The Differences Between Common Accounting Terms.11 What is included in the income statement?.9.1 Absorption Costing Income Statement.7.4 Absorption Costing vs Variable Costing Income Statement.7.3 Single-Step vs Multi-Step Income Statement.7.2 Profit and Loss vs Income Statement.7 The Differences Between Common Accounting Terms.4 What is included in the income statement?.2.7 Absorption Costing Income Statement.2.6 Contribution Margin Income Statement.It is one of three major financial statements required by GAAP (generally accepted accounting principles).Īccording to Black’s Law Dictionary, the definition of a basic income statement is:Ī simple way to track expenses and income using one line terms with a single total at the bottom. Investors and business managers use the income statement to determine the profitability of the company.

When utilized together, the income statement, balance sheet, and statement of cash flows provide a clear picture of your company’s overall financial status, serving as helpful tools for analysis, planning, and decision-making.Īn income statement shows the income and expenses of a company over a specified period of time. While income statements may seem overwhelming at first, they are an essential part of doing business, and you will soon appreciate the valuable information they provide for your company. The income statement is one of three key financial statements used by all companies, from small businesses to large corporations.

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