Which financial statement summarizes revenues, cost of sales, and operating expenses over a period?

Which financial statement summarizes revenues, cost of sales, and operating expenses over a period?

• A. Income Statement
• B. Balance Sheet
• C. Cash Flow Statement
• D. Statement of Changes in Equity

Answer: (A)

A key measure of profitability over time is shown on the income statement, which collects all revenues, subtracts the cost of sales (the direct costs tied to delivering the service), and subtracts operating expenses (overhead and other day-to-day costs) for a specific period. The result is net income or net loss for that period, which tells you how well the business performed financially during that span. In landscaping terms, revenue comes from the services you provide, cost of sales covers the direct costs to deliver those services (materials, subcontractors, fuel tied to jobs, etc.), and operating expenses include things like wages for administrative staff, marketing, office expenses, and depreciation. This statement is about performance over a timeframe—monthly, quarterly, or yearly—and it contrasts with the other statements: the balance sheet shows a snapshot of assets, liabilities, and equity at a point in time; the cash flow statement tracks actual cash inflows and outflows; and the statement of changes in equity shows how owner’s equity changes over the period due to profits, withdrawals, and contributions.

A key measure of profitability over time is shown on the income statement, which collects all revenues, subtracts the cost of sales (the direct costs tied to delivering the service), and subtracts operating expenses (overhead and other day-to-day costs) for a specific period. The result is net income or net loss for that period, which tells you how well the business performed financially during that span.

In landscaping terms, revenue comes from the services you provide, cost of sales covers the direct costs to deliver those services (materials, subcontractors, fuel tied to jobs, etc.), and operating expenses include things like wages for administrative staff, marketing, office expenses, and depreciation. This statement is about performance over a timeframe—monthly, quarterly, or yearly—and it contrasts with the other statements: the balance sheet shows a snapshot of assets, liabilities, and equity at a point in time; the cash flow statement tracks actual cash inflows and outflows; and the statement of changes in equity shows how owner’s equity changes over the period due to profits, withdrawals, and contributions.