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Which financial statement reports a business's revenue, expenses, and resulting profit for a period of time?
AThe statement of financial position
BThe statement of profit or loss
CThe statement of cash flows
DThe chart of accounts
Answer & Solution
Correct answer: B. The statement of profit or loss
1. The statement of profit or loss (income statement) lists and summarizes revenue, expense, and net income for a period.
2. It is based on $\text{Revenue} - \text{Expenses} = \text{Net income}$.
3. The statement of financial position reports assets, liabilities, and equity at a point in time, not profit, ruling out A.
4. The cash flow statement and the chart of accounts do not report period profit, ruling out C and D.
5. Therefore it is the statement of profit or loss.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.4.1 "Income Statement", p.22_
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