Many business decisions are made in hopes of improving a firm's "bottom line." Which of the following financial statements will reveal a firm's "bottom line"?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Trial balance

Question

Quizplus · Accepted Answer

The income statement, also known as the profit and loss statement, shows a company's revenues and expenses over a specific period of time. The "bottom line" refers to the net income or loss of the company, which is calculated by subtracting total expenses from total revenue. Therefore, the income statement is the financial statement that reveals a firm's "bottom line." The balance sheet is a snapshot of a company's financial position at a specific point in time, while the statement of cash flows shows the inflows and outflows of cash during a specific period. The trial balance is a list of all accounts and their balances used to ensure that debits and credits are in balance. None of these statements directly reveal the firm's "bottom line."

Many Business Decisions Are Made in Hopes of Improving a Firm's