Income Statement, also known as Profit and Loss Statement, abbreviated as P&L. It is a term that refers to a financial statement showing the relationships between the enterprise’s revenues over time and costs needed to create them. The statement informs about how successful enterprise in the period was and what financial result achieved.
Since revenue is the sum of cash, which the enterprise receives from all its activities, and costs mean the expression of the cash value efficiently incurred in given period to obtain revenues, the resulting net profit shows the financial status, not actual cash flows.
Use of the P&L in practice: The income statement and balance sheet with additional annex create an annual financial report. Enterprises involved with the property (20%) in other companies prepare, so called, consolidated financial report.
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