Funeral Arts National Board Practice Exam

Which financial statement provides an overview of a company's revenues and expenses over a period of time?

1. Balance sheet

2. Statement of cash flows

3. Income statement

4. Statement of operations

The correct answer is: Income statement

The income statement is the financial statement that provides a detailed overview of a company's revenues and expenses over a specific period of time. It is designed to give stakeholders insight into the company’s operational performance and profitability. The income statement summarizes the money earned (revenues) and the costs incurred (expenses) during the reporting period, ultimately showing the net income or loss. This format allows for comparison against previous periods, aiding in the analysis of trends in profitability. While the statement of operations is similar and often used interchangeably with the income statement in different contexts, the income statement is the more widely recognized term. The balance sheet, on the other hand, reflects the company's financial position at a single point in time, listing assets, liabilities, and equity, rather than detailing revenues and expenses over a period. The statement of cash flows provides insights into the inflows and outflows of cash within the company, focusing on liquidity rather than profitability.