Income Statement - GCSE Business Definition

An Income Statement, also known as a Profit and Loss Account, is a financial document that states a company’s revenues, costs, and expenses over a specific time period. It is crucial for assessing a business’s financial performance, showing whether the company has made a profit or a loss during the time period. It starts with total revenue, from which the cost of goods sold is deducted to find the gross profit. Other operating expenses are subtracted, and other income is added to reach the net profit or loss. Understanding how to interpret an income statement helps GCSE Business students assess how efficiently a business operates, manages costs, and makes informed financial decisions.