A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing
A) the Income Statement.
B) the Balance Sheet.
C) the Statement of Cash Flows.
D) cannot be determined.

Question

Quizplus · Accepted Answer

The Income Statement shows a company's revenues and expenses over a period of time, and ultimately calculates the net income or loss for the period. This information allows the user to determine whether the company was profitable or not during the period. The Balance Sheet provides information on the company's assets, liabilities, and equity at a specific point in time, while the Statement of Cash Flows shows the inflows and outflows of cash during a period of time. Therefore, neither the Balance Sheet nor the Statement of Cash Flows alone can provide sufficient information to determine profitability.

A Financial Statement User Would Determine If a Company Was