Which financial statement should Kevin use to best summarize his company's financial performance over the last quarter?

• A. Balance Sheet
• B. Statement of Changes in Equity
• C. Statement of Cash Flows
• D. Income Statement

Answer: (D)

Verified step by step guidance

1. Understand the purpose of each financial statement: The Balance Sheet provides a snapshot of the company's financial position at a specific point in time, the Statement of Changes in Equity shows changes in ownership equity, the Statement of Cash Flows details cash inflows and outflows, and the Income Statement summarizes revenues and expenses over a period.
2. Recognize that financial performance is typically measured by profitability, which is determined by comparing revenues and expenses. This information is found in the Income Statement.
3. The Income Statement covers a specific period, such as a quarter, and includes key metrics like net income, gross profit, and operating expenses, which are essential for evaluating financial performance.
4. The other financial statements, while important, do not directly summarize financial performance over a period. For example, the Balance Sheet focuses on assets, liabilities, and equity at a point in time, not performance trends.
5. Conclude that Kevin should use the Income Statement to best summarize his company's financial performance over the last quarter, as it provides a detailed view of profitability and operational results during that time frame.