Finance increasingly influences the world of IT as CIOs are constantly being pressured to reduce costs. Understanding financial management can be difficult and frustrating for IT professionals who do not have training or experience in this area. To help the IT department cope with the increasing importance of finance, learn about one of the most important tools in financial accounting: the Income Statement.
The Income Statement
The income statement reports the increase or decrease in profitability of a company over a period of time. An income statement measures company revenues and expenses for a specific period of time (e.g. month, quarter, or year). Revenues are the cash inflows resulting from a company's sales activities. Expenses are the cash outflows associated with generating those sales. The difference between a company's revenues and expenses is either a gain or a loss. This statement is different than the balance sheet, which is a statement of the financial position of a company in terms of assets and liabilities at a point in time.