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An income statement, also known as a profit and loss statement, is a financial statement that summarises a company's revenues, expenses, gains, and losses over a specific period. It presents a clear picture of a company's financial performance and profitability. The income statement begins with the company's total revenues, including sales, fees, and other income sources. It then deducts the cost of goods sold (COGS) to calculate the gross profit. Operating expenses such as salaries, rent, marketing, and utilities are subtracted from the gross profit to determine the operating profit or loss.