Question

True or False
A statement of income and expenses is a type of accounting report

Answer 1

TRUE

Accounting reports are periodic statements that present the financial status of a company at a certain point in time, or over a stated time-period. It details the business transactions and operations.

They are a compilation of financial information that infer from a business’ accounting records. Their nature varies, as they can be brief or custom-made with a specific purpose: detailing sales per region, the profitability of a product, etc. Usually, accounting reports are considered to be financial statements which include:

balance sheet: it is a snapshot of a business at a specific time, and shows the ending assets, liability and equity balances as of the balance sheet date. It is useful to measure the financial reserves and liquidity of a business.

– an income statement: is also known as profit and loss report. It details the revenue earned over a certain period of time.

– a cashflow statement: as the name states, it is a statement of the flows of cash both in and out. It details the sources and uses of cash in relation to a business’ operations, investments and financing. It is often considered as the most reliable source of information when it comes to the cash-generation capacity of a firm.