A period-of-time report on the profitability of business operations is a

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

Answer: (B)

Profitability over a period is shown by the income statement, which records revenues and expenses for a defined span (like a month, quarter, or year) to reveal net income or loss. This snapshot of performance tells you how much profit the business made during that period after all costs are considered. The balance sheet, in contrast, is a point-in-time snapshot of assets, liabilities, and equity; the cash flow statement tracks actual cash movements during the period; and the statement of changes in equity shows how owners’ equity changed over the period. Since the question focuses on profitability across a period, the report that sums revenues and expenses to produce net income is the income statement.