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The income statement is a simple and straightforward report on a business' cash-generating ability. It's an accounting scorecard on the financial performance of your business that reflects quantity of sales, expenses incurred and net profit. It draws information from various financial categories, including revenue, expenses, capital (in the form of depreciation) and cost of goods. By combining these elements, the income statement illustrates just how much income your company makes or loses during the year by subtracting cost of goods and expenses from total revenue to arrive at a net result, which is either a profit or a loss.
An income statement lists financial projections in the following format:
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