Question

Which of the following best describes the income statement?
A. a financial statement detailing a firm’s assets, liabilities, and owners’ equity
B. a detailed statement of estimated receipts and expenditures for a period of time in the future
C. a financial statement showing a firm’s yearly cash receipts and cash payments
D. a financial statement listing a firm’s annual revenues and expenses so that a bottom line shows annual profit or loss

Answer 1

Answer:

D. a financial statement listing a firm’s annual revenues and expenses so that a bottom line shows annual profit or loss

Explanation:

An income statement is among the three main financial statements prepared by a business at the end of a period. The income statement reports the profits or losses realized by the company at the end of a specific financial year. It is both a financial and an accounting document.

The income statement summarizes business revenue and shows the net income. It also analyzes all expenses and indicates the total cost incurred by the business. The last section of an income statement states if the business made a profit or a loss. Usually, a business prepares income statement at the end of every quarter and the end of the year.

Answer 2

Statement that can be considered as a true statement as regards income statement is D:a financial statement listing a firm’s annual revenues and expenses so that a bottom line shows annual profit or loss.

• An income statement  can  be regarded as a financial statement which give out company's income as well as expenditures.

• It give out the firm’s annual revenues as well as expenses, hence, the annual profit or loss.

Therefore, option D is correct.

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