An income statement
A) summarizes the changes in equity for a specific period of time.
B) reports the changes in assets, liabilities, and equity over a period of time.
C) reports the assets, liabilities, and equity at a specific date.
D) presents the revenues and expenses for a specific period of time.

Question

Quizplus · Accepted Answer

An income statement presents the revenues and expenses for a specific period of time, typically a year or a quarter. The purpose of an income statement is to show the profitability and financial performance of a company, which is calculated as the difference between revenues and expenses. Therefore, option D is the correct answer. Option A is incorrect because an income statement does not summarize the changes in equity, but instead shows how revenues and expenses affect the equity. Option B is incorrect because a statement of changes in equity reports the changes in assets, liabilities, and equity over a period of time. Option C is incorrect because a balance sheet reports the assets, liabilities, and equity at a specific date.

An Income Statement