Book 1

A companies profit or loss can be shown by an income statement, which is a second primary financial report. 

This report gives a summary of totals of all the income and expense items in a business. 

If the total income is greater than the total expenses then this positive difference is referred to as a Profit

If the total income is less than the total costs this negative difference is referred to as a Loss

Cash flow of an enterprise is summarised in a cash flow statement. This report summarises the cash coming in and out of a business.

This statement is compulsory for larger companies but not required for sole traders.