Income Statement

Definition

A financial statement showing revenue, expenses, and profit over a period—the report card executives pray nobody reads closely.

Example Usage

The income statement shows a 15% increase in revenue but a 25% increase in operating expenses.

Origin

Developed with modern financial reporting standards in early 20th century

Fun Fact

Also called a 'P&L' statement because profit and loss is all anyone remembers

Source: Required financial statement under GAAP

Related Terms

Beginner

Cash Flow

The movement of money in and out of a business, which in most startups flows primarily in the out direction at an alarming velocity. Positive cash flow means more money coming in than going out, a concept that seems simple until you try to actually achieve it.

💰 Finance / Accounting

Intermediate

operating cycle

The time it takes to convert cash into inventory, inventory into receivables, and receivables back into cash—essentially how long your money is tied up in operations. Shorter is better unless you're a fine wine producer.

💰 Finance / Accounting

Intermediate

stimulus

Government money injected into the economy during crises, based on the economic theory that the best way to fix problems is to print cash and hope for the best. It's designed to stimulate spending and growth, though recipients often prefer to save it or pay down debt, completely missing the point. Politicians love stimulus packages because they get to look generous with other people's money while economists argue about whether it actually works.

💰 Finance / Accounting

Advanced

Hedge

An investment made to offset potential losses in another investment, which is basically placing a bet that your other bet might be wrong. It's the financial equivalent of bringing both sunscreen and an umbrella because you have zero faith in the weather forecast.

💰 Finance / Accounting

Advanced

Negative Pledge

A loan covenant preventing borrowers from pledging assets as collateral to other lenders, protecting unsecured creditors from being subordinated. It's lenders making sure you can't promise the same car to multiple people.

💰 Finance / Accounting

Beginner

appreciation

When an asset increases in value over time without you lifting a finger—the financial equivalent of your wine collection getting better with age. It's what homeowners brag about at parties and what makes early Bitcoin investors insufferable. The opposite of depreciation, and the reason everyone thinks they're a real estate genius in a bull market.

💰 Finance / Accounting

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