Income statement

The income statement is the part of the year-end accounts that shows the company's income and expenses over a period, usually a financial year, and therefore whether the business has made a profit or a loss. It is read from top to bottom: net turnover, operating expenses, operating profit, financial items, appropriations, tax and profit for the year.

The balance sheet, by contrast, shows the financial position at a particular point in time. The profit for the year in the income statement is transferred to equity in the balance sheet.

The income statement can be set out either by nature of expense or by function. Most smaller companies use the format by nature of expense, where expenses are divided into goods, staff, depreciation and other external expenses. Monthly reports with key figures are based on the same layout and are included in our Premium package.