The statement of profit or loss:
A) reports the assets, liabilities and equity at a specific point in time.
B) summarises the change in retained earnings over a specific period of time.
C) presents the income and expenses of an entity for a specific period of time.
D) reports the changes in assets, liabilities and equity over a period of time.

Question

Quizplus · Accepted Answer

The statement of profit or loss, also known as the income statement, presents the income and expenses of an entity for a specific period of time. It shows the net profit or loss for the period, which is then used to calculate the change in retained earnings on the statement of financial position. Therefore, choice C is the correct answer.

The other options are incorrect:
A) The statement of financial position, also known as the balance sheet, reports the assets, liabilities and equity at a specific point in time. 
B) The change in retained earnings is reported on the statement of changes in equity. 
D) The changes in assets, liabilities and equity over a period of time are reported on the statement of cash flows.

The Statement of Profit or Loss