Funeral Arts National Board Practice Exam

What is another name for the income statement that reports the profitability of a business?

1. Revenue report

2. Statement of operations

3. Cash flow statement

4. Balance sheet

The correct answer is: Statement of operations

The income statement, which details a company's revenues, expenses, and ultimately its profitability over a specific period, is often referred to as the statement of operations. This term reflects the operational performance of the business, focusing on its ability to generate profit through its core activities. In different contexts, the income statement may also be called the statement of earnings or statement of profit and loss, but 'statement of operations' is a widely recognized alternative that encapsulates its purpose effectively. This name emphasizes the operational aspect of income generation and expenses related directly to that process. The other options refer to different financial documents. The revenue report is more focused on top-line sales figures rather than the full profitability picture. The cash flow statement captures the flow of cash, highlighting liquidity rather than profitability over the same period. The balance sheet provides a snapshot of a company's assets, liabilities, and equity at a single point in time, rather than over a period like the income statement. Thus, recognizing the correct terminology is crucial for understanding financial reporting in any business context.