A:

The financial accounting statement that contains information on a company’s net sales is the income statement. The income statement provides information on the financial performance of the business. It is, along with the balance sheet and the cash flow statement, one of the three financial statements analysts use to determine whether or not a company is a good investment.

The income statement provides data that shows whether the company has made a profit or a loss from its operations. It is sometimes referred to as a profit and loss (P&L) statement or a P&L account. In addition to net sales, which is the income generated from operations, the income statement provides information on other revenues, returns inward, returns outward, purchases and expenses incurred in the process of generating income.

The net sales refer to the amount of goods or services actually sold and for which receipts are received or expected. In certain instances, some of the goods sold are returned by customers. This is defined as returns inwards, and the value of these is subtracted from the gross sales revenue to arrive at the net sales figure. Customers may request refunds for various reasons, so all of them are simply deducted from the gross sales.

The income statement complements the balance sheet and the cash flow statement. The balance sheet, or statement of financial position, provides information on the fiscal status of a business while the cash flow statement, or statement of cash flows, provides information on the financial adaptability of the business.

RELATED FAQS
  1. How are the three major financial statements related to each other?

    Learn why investors analyze a company's financial statements, and how the income statement, balance sheet and cash flow statement ... Read Answer >>
  2. When do companies publish P&L statements?

    Understand what a company's P&L statement represents, and find out when companies traditionally publish these statements. Read Answer >>
  3. How do you find a company's P&L statement?

    Learn how to find a company's profit and loss statement, along with the other financial statements that companies regularly ... Read Answer >>
  4. What is the difference between a P&L statement and a balance sheet?

    The primary difference between the profit and loss statement and the balance sheet involves their respective treatments of ... Read Answer >>
  5. How can I find net margin by looking a company's financial statements?

    Learn how to calculate a company's net margin using financial statements by dividing the company's net revenues by its net ... Read Answer >>
  6. Which financial statements are most important when performing ratio analysis?

    Learn which financial statements are used for ratio analysis. Find out what financial data is needed to conduct fundamental ... Read Answer >>
Related Articles
  1. Investing

    What Is The Difference Between A Cash Flow Statement And An Income Statement?

    A firm’s cash flow statement measures the sources and uses of its cash. The income statement shows how it is financially performing.
  2. Investing

    Comparing the P&L Statement and the Balance Sheet

    Basically, the balance sheet shows how much a company is worth, while the P&L statement reveals if a company is profitable or not.
  3. Investing

    Understanding the Income Statement

    The best way to analyze a company - and figure out if it's worth investing in - is to know how to dissect its income statement. Here's how to do it.
  4. Investing

    What's a P&L Statement?

    A profit and loss statement, also called the income statement, is a financial statement that companies use to report their income and expenses for a quarter or a year.
  5. Investing

    Explaining Financial Statement Analysis

    Financial statement analysis is the process of reviewing a company’s statements to gain an understanding of its financial health.
  6. Investing

    The Essentials Of Corporate Cash Flow

    Tune out the accounting noise and see whether a company is generating the stuff it needs to sustain itself.
RELATED TERMS
  1. Income Statement

    A financial statement that measures a company's financial performance ...
  2. Financial Statements

    Records that outline the financial activities of a business, ...
  3. Combined Statement

    Also known as a descriptive or consolidated statement, combined ...
  4. Account Statement

    A periodic summary of account activity with a beginning date ...
  5. Top Line

    A reference to the gross sales or revenues of a company, or an ...
  6. Bank Statement

    A record, usually sent to the account holder once per month, ...
Hot Definitions
  1. Promissory Note

    A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on ...
  2. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Absolute Advantage

    The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost ...
  5. Nonce

    Nonce is a number added to a hashed block, that, when rehashed, meets the difficulty level restrictions.
  6. Coupon

    The annual interest rate paid on a bond, expressed as a percentage of the face value. It is also referred to as the "coupon ...
Trading Center