Which financial statement shows a company’s revenue and expenses over a period of time?

Which financial statement shows a company’s revenue and expenses over a period of time?

• A. The Balance Sheet
• B. The Statement of Cash Flow
• C. The Statement of Equity
• D. The Income Statement

Answer: (D)

The income statement reflects how a company performed financially over a period by listing revenues earned and expenses incurred, then showing the resulting net income or net loss. This ongoing period-by-period view captures how all the operating activities, sales, costs, and other expenses affect profitability, rather than a snapshot of position or cash flows. For example, it includes items like sales revenue, cost of goods sold, salaries, rent, and depreciation, culminating in net income. This differs from the balance sheet, which shows what the company owns and owes at a single point in time (assets, liabilities, and equity). It also differs from the statement of cash flows, which tracks actual cash inflows and outflows during the period, regardless of when revenue or expenses are recognized. The income statement is the one that specifically tracks revenue and expenses over the period, which is why it’s the best answer.

The income statement reflects how a company performed financially over a period by listing revenues earned and expenses incurred, then showing the resulting net income or net loss. This ongoing period-by-period view captures how all the operating activities, sales, costs, and other expenses affect profitability, rather than a snapshot of position or cash flows. For example, it includes items like sales revenue, cost of goods sold, salaries, rent, and depreciation, culminating in net income.

This differs from the balance sheet, which shows what the company owns and owes at a single point in time (assets, liabilities, and equity). It also differs from the statement of cash flows, which tracks actual cash inflows and outflows during the period, regardless of when revenue or expenses are recognized. The income statement is the one that specifically tracks revenue and expenses over the period, which is why it’s the best answer.