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. Income Statement
• B. Trial Balance
• C. General Ledger
• D. Balance Sheet

Answer: (A)

The income statement is the financial document specifically designed to summarize a company's revenues and expenses over a defined period, typically reflecting the performance of the business during that time frame. This statement provides valuable insights into the profitability of the company by detailing how much money was earned through sales, as well as the costs incurred in generating those sales. The income statement concludes with the net income or loss for the period, which is calculated by subtracting total expenses from total revenues. This crucial component of financial reporting helps stakeholders evaluate the operational efficiency and financial strategy of the business. In contrast, the trial balance is a report that checks the accuracy of the ledger entries by ensuring that total debits equal total credits but does not summarize income or expenses over a period. The general ledger is a complete record of all financial transactions and does not provide a summary figure like the income statement. The balance sheet, on the other hand, offers a snapshot of a company's financial position at a specific point in time, detailing its assets, liabilities, and equity, rather than summarizing financial performance over a period.

The income statement is the financial document specifically designed to summarize a company's revenues and expenses over a defined period, typically reflecting the performance of the business during that time frame. This statement provides valuable insights into the profitability of the company by detailing how much money was earned through sales, as well as the costs incurred in generating those sales.

The income statement concludes with the net income or loss for the period, which is calculated by subtracting total expenses from total revenues. This crucial component of financial reporting helps stakeholders evaluate the operational efficiency and financial strategy of the business.

In contrast, the trial balance is a report that checks the accuracy of the ledger entries by ensuring that total debits equal total credits but does not summarize income or expenses over a period. The general ledger is a complete record of all financial transactions and does not provide a summary figure like the income statement. The balance sheet, on the other hand, offers a snapshot of a company's financial position at a specific point in time, detailing its assets, liabilities, and equity, rather than summarizing financial performance over a period.