Accounting Fundamentals Certification (AFC) 2025 – 400 Free Practice Questions to Pass the Exam

The income statement is the financial document that summarizes a company's financial performance over a specific period, typically covering revenues, expenses, and profits or losses. This statement provides a clear picture of how well the company has performed in generating income through its operations by comparing total revenues against total expenses. It typically encompasses periods such as a quarter or a year, allowing stakeholders to assess the company's ability to generate profit over time.

While the balance sheet provides a snapshot of a company's assets, liabilities, and equity at a specific point in time, and the statement of cash flows highlights the inflow and outflow of cash within the same timeframe, these documents do not summarize performance in terms of profitability, which is the primary function of the income statement. The owner's equity statement, on the other hand, outlines changes in equity over a period but focuses on ownership rather than operational performance.