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Guide To Analysing Companies, Fifth Edition by Bob Vause

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3 The income statement

T HE INCOME STATEMENT (previously called the profit and loss account in the UK) deals with the operating activities of a company and is intended to provide a report on its performance during the year. The statement gives details of a company’s income and expenditure for the year. Where sales revenue is greater than expenses a profit is produced; the reverse results in a loss – hence profit and loss account.

Profit considerations

Different profits for different purposes

A considerable amount of time could be spent discussing various definitions of profit. A starting point for an accountant might be that “a profit is produced when income is greater than costs”; for an economist it might be “what you can spend during ...

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