Summarise with AI
What it contains
An income statement works down from revenue to profit in three stages:
- Revenue, with GST-free sales shown separately if relevant
- less cost of sales = gross profit
- less operating expenses = operating profit
- less interest and other items = net income
Each line is usually shown as a percentage of revenue as well as in dollars, because percentages are what compare across periods and sites.
Income statement, P&L, statement of financial performance
These are the same document. Income statement is the international term, profit and loss statement is what most Australian small businesses and accountants say, and statement of financial performance appears in formal reporting.
If a template calls itself one and you were expecting another, it is not a different report.
Period, not point in time
The defining difference from a balance sheet is time. An income statement covers a period — a month, a quarter, a financial year. A balance sheet is a point in time, a snapshot at a single date.
That is why an income statement always carries a date range in its heading, and a balance sheet carries a single "as at" date. In Australia the year-end date is ordinarily 30 June.
Key takeaways
- Income statement, profit and loss statement and statement of financial performance are the same report
- It works from revenue down through gross profit and operating profit to net income
- It covers a period; a balance sheet is a point in time
- Show each line as a percentage of revenue as well as in dollars
Wages are the largest line between revenue and profit in most shift-based businesses — cost them before the roster is published.
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