Final answer:
The main components of an income statement are revenue and expenses. These elements show a company's financial performance by indicating how much money is earned and spent, determining profit or loss.
Step-by-step explanation:
The main components of an income statement are revenue and expenses. The income statement is one of the key financial statements used to assess a company's financial performance. It provides a summary of how the company earns (revenue) and spends (expenses) money over a specific period, showing whether the company has made a profit or a loss.
- Revenue - The money a company earns from its business activities.
- Expenses - The costs incurred by the company in the process of earning revenue.
Unlike the balance sheet, which lists a company's assets and liabilities and provides a snapshot of the company's financial condition at a single point in time, the income statement focuses on the company's operating performance during a particular period.