Which financial statement shows revenues and expenses?

• A. Income Statement
• B. Balance Sheet
• C. Cash Flow Statement
• D. Statement of Changes in Equity

Answer: (A)

The income statement is where you track performance over a period by listing all revenues earned and expenses incurred, ending with net income or loss. This format isolates how much the company earned from its operations after accounting for costs, giving a clear picture of profitability for that interval. It’s different from the balance sheet, which shows what the company owns and owes at a single moment in time, or the cash flow statement, which tracks actual cash inflows and outflows, and from the statement of changes in equity, which details how owners’ equity changed during the period. Revenues and expenses on the income statement drive net income, which then influences retained earnings on the balance sheet, but they’re specifically presented here to measure performance, not financial position or cash movements.