An income statement is also known as what?

An income statement is also known as what?

• A. Profit and Loss Statement
• B. Balance Sheet
• C. Cash Flow Statement
• D. Statement of Changes in Equity

Answer: (A)

An income statement measures profitability over a period by showing revenues and expenses, and it’s commonly called the Profit and Loss Statement. This name comes from how it subtracts costs from revenue to reveal net income or loss for the period. It differs from other financial statements: the balance sheet captures a point-in-time snapshot of assets, liabilities, and equity; the cash flow statement tracks cash inflows and outflows; and the statement of changes in equity shows how owners’ equity changes over the period. For example, if a company earns 500 in revenue and incurs 350 in expenses, the net income is 150, reflecting how much profit came from that period’s activities. This focus on profitability over time is what makes the Profit and Loss Statement the best description of the income statement.

An income statement measures profitability over a period by showing revenues and expenses, and it’s commonly called the Profit and Loss Statement. This name comes from how it subtracts costs from revenue to reveal net income or loss for the period. It differs from other financial statements: the balance sheet captures a point-in-time snapshot of assets, liabilities, and equity; the cash flow statement tracks cash inflows and outflows; and the statement of changes in equity shows how owners’ equity changes over the period. For example, if a company earns 500 in revenue and incurs 350 in expenses, the net income is 150, reflecting how much profit came from that period’s activities. This focus on profitability over time is what makes the Profit and Loss Statement the best description of the income statement.