Which financial statement details balance of income and expenditure over a preceding period?

Which financial statement details balance of income and expenditure over a preceding period?

• A. Income statement
• B. Cash flow statement
• C. Statement of changes in equity
• D. Balance sheet

Answer: (D)

The financial statement that details the balance of income and expenditure over a preceding period is the income statement. This statement, also known as the profit and loss statement, summarizes the revenues and expenses for a specific period, allowing stakeholders to see how much profit or loss a company has generated during that time. The income statement provides insight into the company’s operational performance, detailing the revenues earned and the costs incurred to generate those revenues. It ultimately reflects the company's ability to manage its resources effectively to yield profit. While the other statements serve different purposes—such as tracking cash movements (cash flow statement), detailing changes in owners' equity (statement of changes in equity), or displaying a snapshot of assets and liabilities at a specific point in time (balance sheet)—only the income statement focuses on income and expenditure over a preceding period, making it the correct answer.

The financial statement that details the balance of income and expenditure over a preceding period is the income statement. This statement, also known as the profit and loss statement, summarizes the revenues and expenses for a specific period, allowing stakeholders to see how much profit or loss a company has generated during that time.

The income statement provides insight into the company’s operational performance, detailing the revenues earned and the costs incurred to generate those revenues. It ultimately reflects the company's ability to manage its resources effectively to yield profit. While the other statements serve different purposes—such as tracking cash movements (cash flow statement), detailing changes in owners' equity (statement of changes in equity), or displaying a snapshot of assets and liabilities at a specific point in time (balance sheet)—only the income statement focuses on income and expenditure over a preceding period, making it the correct answer.