What is another term for a profit and loss statement?

• A. Balance Sheet
• B. Income Statement
• C. Cash Flow Statement
• D. Financial Forecast

Answer: (B)

A profit and loss statement is commonly referred to as an income statement. This financial document provides a summary of a company's revenues, costs, and expenses over a specific period, usually detailing how much money the business made or lost during that time. The income statement is vital for assessing the financial performance of a business as it illustrates the ability to generate profit after all expenses are deducted from total revenue.

The balance sheet, while also a key financial statement, differs as it provides a snapshot of a company’s assets, liabilities, and equity at a single point in time rather than over a period. The cash flow statement focuses on the inflow and outflow of cash during a specific period, tracking the liquidity of the business rather than its profitability. A financial forecast is an estimate or projection of future financial outcomes based on historical data and assumptions; it is not a financial statement that summarizes actual performance like a profit and loss statement or income statement does.