Question

Which statement provides information about the profitability of the company?

• A. Income statement
• B. Statement of Retained earnings
• C. Financial position statement
• D. Statement of cost

Hint:

To evaluate a company's profitability, always refer to the income statement, as it summarizes revenue and expenses.

Answer 1

The Correct Option is A

Step 1: Understanding profitability statements.
The income statement, also known as the profit and loss statement, provides detailed information about a company's revenues, expenses, and profits during a specific period. It is the primary document for evaluating profitability.

Step 2: Differentiating between financial statements.
Other statements, such as the financial position statement or retained earnings statement, provide information on the company's assets, liabilities, and equity but not on profitability. The statement of cost focuses on costs, not profits.