What information does the income statement provide?

The income statement, also known as the profit and loss statement, is a financial document that summarizes a company's revenues and expenses over a specific period, ultimately leading to the determination of profits or losses. This statement is essential as it shows how much money the company made (revenues) and how much it spent (expenses). The result, known as net income or net loss, is a key indicator of the company's financial performance during that period.

Understanding the income statement helps stakeholders evaluate the company's operational efficiency and profitability. It focuses specifically on income generation and expenditure rather than other aspects of financial health, such as asset distribution or cash flow. While the other options refer to important areas of financial analysis, they do not capture the primary function of the income statement, which is to provide a clear view of profits and losses.