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The Complete Idiot's Guide to Stock Investing Fast-Track by Ken Little

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The Income Statement Is Home to Bottom Line

While many investors and the media focus on the income statement (this is where you find the magic “bottom line”), it only provides part of the picture for any business. Still, the income statement reports whether the business made or lost money. It is easy for some to confuse the income statement with their checkbook. Did I take in more than I spent, and if so, did I make a “profit” this month?

As you might suspect, it is a little more complicated than that. The ability to record a sale before the company is paid is only one of the complicating factors that haunt the income statement.

The income statement has three major sections:

Revenue

Expenses

Earnings or Income

Look at any income statement ...

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