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

Question

Quizplus · Accepted Answer

An income statement reports the revenues and expenses for a specific period of time, typically a month or a year. It shows the profitability of a company during that time period. Option A is incorrect because changes in retained earnings can also occur due to transactions like dividends or stock issuances, which are not reflected in the income statement. Option B describes a statement of cash flows, which reports changes in cash over a period of time. Option C refers to a balance sheet, which reports the financial position of a company at a specific date.

An Income Statement