What is another common name for the income statement?

What is another common name for the income statement?

• A. Profit and loss statement
• B. Balance sheet
• C. Cash flow statement
• D. Statement of financial position

Answer: (A)

The main idea is that financial reports have different names, and some names are used interchangeably for the same report. The income statement shows profitability over a period by listing revenues and expenses to arrive at net income. It’s commonly called the profit and loss statement because it highlights profit or loss over that time span. For example, if revenues are $100 and expenses total $70, net income is $30, which the income statement would reveal. Other items refer to different reports: the balance sheet (also called the statement of financial position in some contexts) shows assets, liabilities, and owners’ equity at a single point in time; the cash flow statement shows cash inflows and outflows over the period. These distinctions are why the profit and loss statement is the best match for the income statement.

The main idea is that financial reports have different names, and some names are used interchangeably for the same report. The income statement shows profitability over a period by listing revenues and expenses to arrive at net income. It’s commonly called the profit and loss statement because it highlights profit or loss over that time span. For example, if revenues are $100 and expenses total $70, net income is $30, which the income statement would reveal.

Other items refer to different reports: the balance sheet (also called the statement of financial position in some contexts) shows assets, liabilities, and owners’ equity at a single point in time; the cash flow statement shows cash inflows and outflows over the period. These distinctions are why the profit and loss statement is the best match for the income statement.