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An income statement refers to a report that contains the description of a business entity鈥檚 revenues and expenses associated with one accounting period.

The following major categories are reported in the income statement:

• Revenues:Revenues are the gross receipts generated by a business concern through itsoperational activities.

• Losses:Losses denote theexcess of expenses incurred by a business than revenue generation.

• Gains:Gains refer to the revenues generated from unusual ornon-operational activities of the company.

Expenses: Expenses are the cost incurred by a business entity to generate revenues.

An income statement contains the elements mentioned above to determine the net loss or net income generated by a business from itsoperating and non-operating activities.

It also facilitates the stakeholders in predicting the company's future and forecasting future profits.