Which two components make up the body of an income statement?

The body of an income statement consists of revenue and expenses. Revenue represents the total income generated from business activities, such as sales of goods or services, before any costs or expenses are deducted. This figure is crucial as it indicates the company’s ability to produce sales and generate cash flow.

Expenses reflect the costs incurred in the process of generating revenue. These can include operating costs, such as wages, rent, utilities, and other related expenses necessary to maintain business operations. The relationship between revenue and expenses ultimately determines the net income or loss for the period, which is the bottom line of the income statement.

Understanding the components of the income statement is essential, as it provides valuable insights into a company's financial performance over a specific period by showing how much profit or loss is generated after accounting for all expenses incurred in the process of earning revenue. While other financial statements may include terms like cash flows, assets, and liabilities, these do not pertain directly to the income statement's primary focus.