Which document summarizes income and expenses for a business?

The income statement is the document that specifically summarizes a business's income and expenses over a particular period, usually a fiscal quarter or year. This statement provides a clear view of the company’s profitability, showing how much revenue was generated, the costs incurred to generate that revenue, and the resulting profit or loss.

It includes components such as total revenue, cost of goods sold, operating expenses, and any other expenses or income that might affect the net profit. This makes it essential for stakeholders, including managers, investors, and financial analysts, who are interested in understanding the operational efficiency and profitability of the business.

In contrast, a balance sheet offers a snapshot of a company’s financial position at a specific moment in time, detailing assets, liabilities, and equity but not summarizing income and expenses over a period. The cash flow statement focuses on the cash inflows and outflows of a business, providing insights into liquidity rather than profitability. Lastly, a financial report is a broader term that can encompass various financial documents, including some that do summarize income and expenses, but is not specific to just that function like the income statement.