Question

Adrian is an investor. He reviews the income statement of a company and concludes that he will benefit from investing in it. What is the information that is provided in the income statement that most likely helped him make this decision?

A.
income statement showed the debts the company owes
B.
income statement showed the net profit of the company for a specific period
C.
income statement showed the assets of the company
D.
income statement showed the equity capital of the company

Answer 1

B. income statement showed the net profit of the company for a specific period

Step-by-step explanation:

The management prepares an income statement at the end of a financial year to show whether a business made a profit or loss. It lists all the revenue in the top section, the expenses in the middle, and profit or loss at the bottom.

The income statement communicates how much profits a business made during a specific financial period. Adrian was impressed by the profits that the company made that period.