Which financial statement summarizes a company’s revenue and expenses over a specific period?

The income statement, sometimes referred to as the profit and loss statement, is the financial document that summarizes a company’s revenue and expenses over a specific period of time, typically a quarter or a year. This statement provides insight into the operational performance of a business by showing how much money the company brought in and how much it spent, ultimately revealing the net income or loss.

The income statement includes several key components: revenues (or sales), cost of goods sold (COGS), gross profit, operating expenses, operating income, and net income. It is essential for stakeholders, including management, investors, and analysts, as it allows them to evaluate the profitability and operational efficiency of the company.

In contrast, the balance sheet provides a snapshot of a company’s assets, liabilities, and equity at a single point in time and does not reflect performance over a period. The cash flow statement tracks the flow of cash in and out of the business, focusing on liquidity rather than profitability. The equity statement, often referred to as the statement of changes in equity, outlines changes in ownership interest over a period and does not summarize revenue and expenses directly. Thus, the income statement is the key document for understanding a company’s profitability over time.