What does an income statement provide for a business?

An income statement provides a summary of income and expenses, ultimately calculating the profit or loss for a specific period. This financial statement reflects the company's ability to generate revenue and manage its costs, allowing stakeholders to assess its overall financial performance. By differentiating between various types of income (such as sales revenue) and expenses (such as operating costs), it provides insights into operational efficiency and profitability. This information is crucial for business owners, investors, and analysts in making informed decisions regarding the company.

In contrast, a record of assets and liabilities pertains to the balance sheet, which shows the financial position of a business at a specific point in time. A report detailing cash flows relates to the cash flow statement, which highlights the inflows and outflows of cash, not a summary of income and expenses. Lastly, a projection of future earnings is typically part of financial forecasting or budgeting, rather than a historical performance summary like the income statement.