Which financial statement shows the revenue and expenses for a fiscal period?

• A. Capital
• B. Income Statement
• C. Equity
• D. Net income

Answer: (B)

The income statement tracks profitability over a period by listing revenues and expenses. It’s also called the statement of earnings or the profit and loss, and it shows how much the business earned and what it spent during the fiscal period, with the difference yielding net income or loss. This period-based view highlights operating performance and is the proper place where revenue and expenses are presented. Capital relates to funds invested or financing, and equity reflects the owner’s stake in the company, neither of which is a report that documents revenues and expenses over a period. Net income, by contrast, is the result shown on this statement—the amount left after subtracting expenses from revenues.