Which financial statement is intended to demonstrate how much money a company is making or losing by subtracting costs from revenues?

• A. Cost control
• B. Statement of cash flows
• C. Balance sheet
• D. Income statement

Answer: (D)

The income statement is the financial report that shows profitability over a period by subtracting costs and expenses from revenues to arrive at net income or loss. This bottom-line figure tells you exactly how much money the company made (or lost) during that period, reflecting core operating performance. Other financial statements serve different purposes: the balance sheet shows the company’s assets, liabilities, and equity at a specific date; the statement of cash flows tracks actual cash movements; and “cost control” isn’t a financial statement but a management activity.