An income statement presents the results of a company's operations for a period a quarter, a year. The income statement presents a summary of the revenues, gains, expenses, losses, and net loss of an entity per period. Along with the balance sheet, the statement of cash flows, and the statement of changes in owners' equity, the income statement is one of the primary means of financial reporting.A company's net income for an accounting period is measured as follows: Net income equals revenues minus expenses plus gains minus losses.
The balance sheet is divided into two parts that, based on the following equation, must equal each other, or balance each other out. The main formula behind balance sheets is:
Assets = Liabilities + Shareholders\' EquityThis means that assets, or the means used to operate the company, are balanced by a company's financial obligations, along with the equity investment brought into the company and its retained earnings.