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The Essentials of Finance and Accounting for Nonfinancial Managers, 2nd Edition by Edward FIELDS

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CHAPTER TWOThe Income Statement

The income statement, often called a statement of operations or a profit and loss statement (P&L), describes the performance of the company over a period of time, usually a month, a quarter, or a year. This information measures the company’s achievement (revenue) and the resources (expenses) that were expended in order to produce that achievement. The income statement is summarized as follows:

RevenueExpenses = Profit

The difference between revenues achieved and expenses incurred is called profit or net income.

The following paragraphs describe the details of the income statement. As a reference, we have provided a five-year history of the Metropolitan Manufacturing Company in Exhibit 2-1. This is part of the ...

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