A(n) _____ is a summary of what a company has earned and spent over a given period.

• A. Single-step income statement
• B. Statement of retained earnings
• C. Statement of cash flows
• D. Balance sheet

Answer: (A)

Verified step by step guidance

1. Understand the purpose of each financial statement: A single-step income statement summarizes revenues and expenses to calculate net income. The statement of retained earnings shows changes in retained earnings over a period. The statement of cash flows details cash inflows and outflows. The balance sheet provides a snapshot of assets, liabilities, and equity at a specific point in time.
2. Identify the key phrase in the question: 'summary of what a company has earned and spent over a given period.' This indicates a focus on revenues and expenses, which are typically covered in an income statement.
3. Recall that a single-step income statement is a simplified format that lists all revenues and expenses in one step to calculate net income, making it the most relevant option for summarizing earnings and expenditures.
4. Eliminate the other options: The statement of retained earnings focuses on changes in equity, not earnings and expenses. The statement of cash flows focuses on cash transactions, not a summary of earnings and expenses. The balance sheet provides a snapshot of financial position, not a summary of earnings and expenses.
5. Conclude that the correct answer is 'Single-step income statement,' as it directly summarizes what a company has earned and spent over a given period.