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income statementAn accounting statement that shows a firm's SALES REVENUE generated over a trading period and all the relevant costs experienced in earning that revenue. In the account, the COST OF SALES is deducted from sales revenue to calculate GROSS PROFIT; then the other costs involved are deducted from the gross profit to show any NET PROFIT earned.
In effect, the profit-and-loss account provides a summarized financial video-recording of the firm's trading activities. Fig. 72 shows the typical layout of a profit and loss account. See also VALUE ADDED, ECONOMIC VALUE ADDED.