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In this video tutorial, James explains what an income statement, also known as a profit and loss statement (P&L), is and its role in measuring a business's financial performance. He emphasizes that the income statement is one of the three major financial statements in accounting, alongside the balance sheet and the cash flow statement, which collectively provide insights into a business’s financial health. James mentions that he has previously created videos on the other two statements and acknowledges the audience's requests for this specific topic, dedicating the video to a subscriber named Nili.