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an income statement or a p l profit and loss statement is a financial report that shows how much your business has spent and earned and whether youve made a profit or a loss if you have a profit your business strategy is working if you have a loss youll be able to take a look to see what the problem could be the statement can cover any period of time although its most commonly prepared at the end of a month a quarter or a year lets break down our example of a p l statement which weve broken into four key sections number one is revenue this is any money generated from sales or Services number two is your cost of sales these are the direct costs related to the production and sale of a product or service it includes things like inventory and wages spent to manufacture Goods or deliver services these two numbers will be your gross profit or loss total number three is for your other income this is stuff thats not sales if you earn interest from a bank account or sell an old piece of e
