An income statement, also referred to as a profit and loss statement, is essentially an itemized list of revenues and expenses that calculates the profit or loss of your business for the period. By reviewing your income statement regularly, you can:

• Track revenues and expenses.
• Determine the operating performance of your business.
• Compare revenue and expenses to budgeted amounts.
• Identify unexpected expenses.
• Track fluctuations in product returns or cost of goods sold as a percentage of sales.
• Determine your taxable income.