Which financial statement summarizes revenues and expenses over a period?

The income statement summarizes a company’s revenues and expenses over a period.

Also called a profit-and-loss statement or P&L, the income statement shows how revenue is transformed into net income or net loss after expenses, other gains and losses, financing costs, and taxes are considered. It helps managers, investors, and creditors evaluate whether the business generated a profit during the reporting period.

Unlike a balance sheet, which describes financial position at one specific date, an income statement covers an interval such as a month, quarter, or year. That time-based distinction is a common quiz and accounting mix-up. A cash flow statement also covers a period, but it focuses on cash inflows and outflows rather than accounting income and expenses.

Income statements may use a single-step or multi-step format. A single-step version subtracts total expenses from total revenues. A multi-step statement can show gross profit, operating income, income before tax, and finally net income. Under accrual accounting, reported revenue or expense does not necessarily mean cash was received or paid during that same period.