Which financial statement summarizes a company's revenues and expenses over a specific period?

Which financial statement summarizes a company's revenues and expenses over a specific period?

• A. The balance sheet
• B. The cash flow statement
• C. The income statement
• D. The statement of changes in equity

Answer: (C)

The income statement is the financial statement that summarizes a company's revenues and expenses over a specific period, typically a month, quarter, or year. This statement is fundamental for assessing a company's profitability and operational efficiency during the designated timeframe. It provides crucial information on how much money the company has earned through sales and services, as well as the costs incurred to generate that revenue, which ultimately determines the net income or loss for that period. In contrast, the balance sheet provides a snapshot of a company's financial position at a specific point in time, detailing its assets, liabilities, and equity. The cash flow statement focuses on the inflows and outflows of cash during a period, helping to illustrate how well a company manages its cash position. The statement of changes in equity outlines the movement in equity accounts over a period, reflecting how investments and dividends affect shareholders' equity. Each of these statements serves a different purpose but does not summarize revenues and expenses like the income statement does.

The income statement is the financial statement that summarizes a company's revenues and expenses over a specific period, typically a month, quarter, or year. This statement is fundamental for assessing a company's profitability and operational efficiency during the designated timeframe. It provides crucial information on how much money the company has earned through sales and services, as well as the costs incurred to generate that revenue, which ultimately determines the net income or loss for that period.

In contrast, the balance sheet provides a snapshot of a company's financial position at a specific point in time, detailing its assets, liabilities, and equity. The cash flow statement focuses on the inflows and outflows of cash during a period, helping to illustrate how well a company manages its cash position. The statement of changes in equity outlines the movement in equity accounts over a period, reflecting how investments and dividends affect shareholders' equity. Each of these statements serves a different purpose but does not summarize revenues and expenses like the income statement does.