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Income statements, previously known as profit and loss accounts, are essential financial statements that display a company's profitability over a specific year. They reveal whether the company has made a profit or a loss. There are four types of profits, of which three appear on the income statement: gross profit, operating profit, and net profit. Net profit, often referred to as profit for the year, is defined by international accounting standards. Understanding these key concepts is crucial for evaluating a company's financial performance alongside other statements such as the statement of financial position and cash flow statements.
