FT Guide to Using and Interpreting Company Accounts, 4th Edition

2

The income statement, or the profit and loss account

Introduction

In this chapter I’ll tell you all about the income statement, or the profit and loss account, showing you the profit the company has made in year. The income statement shows you whether the company is selling its products, or services, for more or less that it costs to deliver them to its customers. To do this, it starts with the income from sales that the company has made during the period, called revenue (or turnover in the UK’s rules) and then deducts the costs relating to those sales. The income statement is not concerned with whether the company has received the cash for its sales or paid for its costs. This means that income statements rarely reflect a company’s ...