Utah Contractor Practice Exam

What financial statement gives a summary of revenues, costs, and expenses during a specific period?

1. Balance Sheet

2. Cash Flow Statement

3. Profit and Loss Statement

4. Revenue Report

The correct answer is: Profit and Loss Statement

The Profit and Loss Statement, also known as the Income Statement, provides a detailed summary of a company’s revenues, costs, and expenses during a specific period. This statement is crucial for assessing the financial performance of a business, as it shows whether the company has made a profit or incurred a loss over that period. By listing all revenues at the top and then detailing all costs and expenses, the statement ultimately arrives at the net income figure, which is the final profit or loss after all expenses have been deducted from total revenues. This is valuable information for stakeholders to evaluate the company’s ability to generate profit and manage its expenses effectively. In contrast, the Balance Sheet provides a snapshot of the company's assets, liabilities, and equity at a single point in time, while the Cash Flow Statement focuses on the inflows and outflows of cash, reflecting the company's liquidity. A Revenue Report may highlight sales figures but does not encapsulate costs and expenses like the Profit and Loss Statement does.