Which of the following statements best describes the income statement?
A)It provides information about the financial position of an entity at a specific point in time.
B)It measures the economic performance of the entity over a period of time.
C)It summarizes the changes to retained earnings during a period.
D)It shows how an entity managed its cash during the reporting period.

Question

Quizplus · Accepted Answer

The income statement measures an entity's economic performance over a period of time, typically one year. It shows the revenues earned and expenses incurred during that period, resulting in net income or loss. It does not provide information about the entity's financial position at a specific point in time, summarize changes to retained earnings, or show how the entity managed its cash.

Which of the Following Statements Best Describes the Income Statement