Walk me through the income statement

Question

Accepted Answer

The income statement shows a company's revenues, expenses, and profits over a specific period of time.

Start with total revenue, which includes sales, services, and other sources of income
Subtract cost of goods sold to calculate gross profit
Then deduct operating expenses such as salaries, rent, and utilities to get operating income
Finally, subtract taxes and interest expenses to arrive at net income
Example: Revenue - Cost of Goods Sold = Gross Profit - Operating Expenses = Operating Income - Taxes and Interest = Net Income