Question

Hemming Company reported the following current-year purchases and sales for its only product. What financial statement will reflect these details?

a) Balance sheet
b) Income statement
c) Cash flow statement
d) Statement of retained earnings

Answer 1

The income statement reflects a company's purchases and sales, with sales recorded as revenue and purchases reflected in the cost of goods sold.

Step-by-step explanation:

The financial statement that will reflect the current-year purchases and sales for a company's product is the income statement. This statement displays a company's revenues and expenses over a specific period, typically a fiscal quarter or year. Sales are recorded as revenue, while purchases related to the cost of goods sold (COGS) are considered expenses. Both of these items have a significant impact on the company's net income, which is a key figure reported on the income statement.