An income statement can also be called?

An income statement can also be called?

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

Answer: (B)

The income statement shows profitability over a period by matching revenues and expenses to determine net income or loss. Because it focuses on the profit or loss a business generates, the standard alternative name is the Profit and Loss Statement. This title captures the idea of measuring earnings and expenses to see how much profit the company earned (or lost) during the period. Other financial statements serve different purposes. A Balance Sheet presents what the company owns and owes at a specific date, the Cash Flow Statement tracks actual cash inflows and outflows, and the Statement of Changes in Equity shows how owners’ equity has changed over time. So the term that best fits the income statement’s purpose is Profit and Loss Statement.

The income statement shows profitability over a period by matching revenues and expenses to determine net income or loss. Because it focuses on the profit or loss a business generates, the standard alternative name is the Profit and Loss Statement. This title captures the idea of measuring earnings and expenses to see how much profit the company earned (or lost) during the period.

Other financial statements serve different purposes. A Balance Sheet presents what the company owns and owes at a specific date, the Cash Flow Statement tracks actual cash inflows and outflows, and the Statement of Changes in Equity shows how owners’ equity has changed over time. So the term that best fits the income statement’s purpose is Profit and Loss Statement.