Income statement, which is also known as profit and loss statement, is a type of a statement that explains the expenses, profits and revenue for a fixed period of time (usually yearly). The income statement forms the basic document for reporting and recording earnings. It is, therefore, very important for investors.
There are many rules and principles to be followed while making an income statement, but in general it can be simply explained as revenue minus expenses for a fixed period of time. The following might generally be found in an income statement: sales revenue, sales return, cost of goods sold, other income and sales/admin/tax/other expenses.