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An income statement, again called profit and loss statement, basically adds an itemized list of all your revenues and subtracts an itemized list of all your expenses to come up with a profit or loss for the period. Having an updated Income Statement each period helps:

            •   Track revenues and expenses so that you can determine the operating performance of your business.

               Determine what areas of your business are over-budget or under-budget.

               Identify specific items that are causing unexpected expenditures. Like phone, fax, mail, or supply expenses.

            •   Track dramatic increases in product returns or cost of goods sold as a percentage of sales.

            •   Determine your income tax liability.