An income statement provides a summary of the sales and expenses for a given time period. It does not show cash inflows and outflows, give a summary of financial position, or show retained earnings. It is important for retailers to prepare income statements regularly to track their profitability and identify areas of improvement.

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An Income Statement

Question 9

Multiple Choice

An income statement:

A) shows the estimated cash inflows and outflows for the period.
B) gives the retailer a summary of the firm's financial position at a given point in time.
C) is usually only prepared when the retailer is seeking to obtain a loan.
D) provides a summary of the sales and expenses for a given time period.
E) is the only financial statement that shows the retailer's retained earnings.

Correct Answer: