What information does the income statement provide for a healthcare organization?

• A. The balance on assets and liabilities.
• B. Revenues and expenses over a period, resulting in net income or loss.
• C. Cash inflows and outflows categorized by operating, investing, and financing.
• D. Patient satisfaction and clinical outcomes.

Answer: (B)

The income statement shows revenues and expenses over a period, resulting in net income or loss. It records what the organization earned from services and other sources and what it spent on items like salaries, supplies, and depreciation, yielding a bottom line for that time frame. In nonprofit healthcare, this is often described as the change in net assets, but the idea is the same: revenues minus expenses give the financial result for the period. This differs from the balance sheet, which presents assets and liabilities at a single point in time; and from the cash flow statement, which tracks actual cash inflows and outflows by operating, investing, and financing activities. Patient satisfaction and clinical outcomes are important performance measures, but they are not the financial results shown on the income statement.