Simple English definitions for legal terms
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Income statement: The income statement is a report that shows how much money a business made and how much money it spent during a certain period of time. It has three parts: revenues (money earned from selling goods or services), expenses (money spent to earn those revenues), and net income (the amount left over after subtracting expenses from revenues). The income statement equation is: Revenue - Expenses = Net Income.
The income statement is a financial report that shows how much money a business made and spent during a certain period of time. It is also known as the statement of income, statement of earnings, statement of operations, or statement of comprehensive income.
The income statement has three main elements:
The relationship between revenues, expenses, and net income can be expressed in an equation:
Revenue - Expenses = Net Income
This equation shows that the net income is the difference between the revenues and the expenses. If the revenues are higher than the expenses, the net income is positive. If the expenses are higher than the revenues, the net income is negative.
Let's say a clothing store had the following financial information for the month of January:
To calculate the net income, we would use the income statement equation:
$10,000 - $7,000 = $3,000
This means that the clothing store had a net income of $3,000 for the month of January. This is the amount of money the store earned after subtracting all its expenses.