Multiple Choice
The primary objective of financial reporting is to provide information:
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1. Introduction to Accounting
The Financial Statements
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Which of the following financial statements reports changes over a period of time?
A
Balance Sheet
B
Income Statement
C
Trial Balance
D
Statement of Financial Position
Verified step by step guidance1
Understand the nature of each financial statement listed in the problem. The Balance Sheet and Statement of Financial Position provide a snapshot of a company's financial position at a specific point in time, not over a period.
Recognize that the Trial Balance is a tool used internally to ensure that debits equal credits in the accounting system. It does not report changes over time but rather serves as a preliminary check.
Focus on the Income Statement, which is designed to report a company's financial performance over a specific period of time, such as a month, quarter, or year.
The Income Statement includes revenues, expenses, and net income (or loss) for the period, showing how the company’s operations have changed its financial position during that time.
Conclude that the correct answer is the Income Statement, as it is the financial statement that reports changes over a period of time.
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