Question

Which of the following statement shows the net profit or loss earned by a business entity?
1. Income statement
2. Balance sheet
3. Trail Balance
4. Cash flow statement

Answer 1

Income statement is a book or a financial statement which records the revenues on the debit side and the expenditures on the credit side, the purpose of this statement is to establish whether the business made profit or encountered loss during a given financial year or a period of a given transaction, if the expenditure is  higher than the revenue then the busines encountered loss and vice versa.

Answer 2

1. Income statement shows the net profit or loss earned by a business entity.

The operating statement is another term used for commercialism and Profit & Loss Account. It determines the profit earned or loss sustained by the commercial enterprise throughout an amount of your time. In giant business organizations, typically one account i.e., commercialism and Profit & Loss Account is ready for knowing net, operational profit, and net income.

On the opposite hand, in little size organizations, this account is split into two elements i.e., commercialism Account and Profit and Loss Account.