Oregon Construction Contractors (CCB) Practice Test

What does an income statement summarize?

1. Current cash position and expenses

2. Revenues and expenses over a given period of time

3. Assets, liabilities, and equity

4. Budget forecasts for the upcoming year

The correct answer is: Revenues and expenses over a given period of time

An income statement summarizes revenues and expenses over a given period of time, typically a month, quarter, or year. It provides a clear picture of a company's financial performance by detailing how much money was generated from sales or services (revenues) and the costs associated with operating during that same timeframe (expenses). This summary ultimately leads to the calculation of net income or loss, which is a critical indicator of a business's profitability. The other options represent different aspects of financial reporting: cash position and expenses relate to the cash flow statement; assets, liabilities, and equity are components that would be included in a balance sheet; and budget forecasts are forward-looking documents that project financial performance. Each of these serves important roles in financial management but does not specifically summarize revenues and expenses like the income statement does.