What does the income statement report over a period of time?

The income statement focuses on measuring a company's financial performance over a specified period, typically a quarter or a year. It reports revenues, which are the earnings generated from normal business operations, such as sales of products or services. By highlighting revenues, the income statement demonstrates a business’s ability to generate income and provides insights into its operational effectiveness.

In addition to revenues, the income statement also reports expenses incurred during the same period, which helps in calculating net income (or net loss) by subtracting total expenses from total revenues. This net income reflects the company’s profitability over that period. The emphasis is on the flow of income and expenses rather than measuring the company's financial position at a point in time, which is the focus of the balance sheet.

This clarity about the performance over a specific timeframe makes the income statement an essential tool for assessing a company’s profitability and informing financial decisions. The income statement does not report on liabilities or assets, as those are components of the balance sheet, which summarizes the company’s financial position at a specific moment.