What is an Income Statement?

What is an Income Statement?

• A. Balance sheet listing assets and liabilities
• B. Record of cash inflows and outflows
• C. Statement of changes in owners' equity
• D. Financial statement that shows revenues, expenses, and net income

Answer: (D)

An Income Statement shows a company’s performance over a period by listing revenues earned and expenses incurred, which leaves you with net income or net loss. This focus on profitability over a span helps you see how well the business converts sales into profit. It’s different from the balance sheet, which is a snapshot of assets, liabilities, and owners’ equity at a single point in time; and from the cash flow statement, which tracks actual cash coming in and going out. It’s also different from the statement of changes in owners’ equity, which shows how equity components change over the period. The description that matches this is the financial statement that presents revenues, expenses, and net income.

An Income Statement shows a company’s performance over a period by listing revenues earned and expenses incurred, which leaves you with net income or net loss. This focus on profitability over a span helps you see how well the business converts sales into profit. It’s different from the balance sheet, which is a snapshot of assets, liabilities, and owners’ equity at a single point in time; and from the cash flow statement, which tracks actual cash coming in and going out. It’s also different from the statement of changes in owners’ equity, which shows how equity components change over the period. The description that matches this is the financial statement that presents revenues, expenses, and net income.