Income Statements Flashcards
1
Q
What is the purpose of an income statement?
A
The purpose of an income statement is to report the revenues earned, the expenses incurred, and the resulting profit or loss for the accounting period.
2
Q
Why is an income statement important
A
It summarises the operating activities of the business
It’s arises from management and its operating decisions
The profit loss period is a result of those decisions
External users such as investors can determine things such as investment value, credit worthiness, income success etc
3
Q
Who uses the information
A
The information is used by owners, creditors and lenders, and anyone who needs to assess how well the business is being managed during the accounting period
