Which financial statement shows the results of a firm's operations over a period of time, usually one year?

• A. balance sheet
• B. cash flow statement
• C. statement of changes in equity
• D. income statement

Answer: (D)

This question tests understanding of which financial statement shows performance over a period. The income statement records revenues and expenses for the period (usually a year) and presents the resulting net income or loss, which is a direct measure of profitability for that time span.

In contrast, the balance sheet shows what the company owns and owes at a specific date, a snapshot of financial position. The cash flow statement tracks how cash moved during the period, and the statement of changes in equity details how owners’ claims changed over the period. These other statements cover different aspects (position at a date, cash movements, and changes in equity) rather than the overall operating results.

So the income statement is the best choice because it explicitly summarizes the firm’s performance over the period with revenues minus expenses, yielding net income or loss.