What does the Income Statement primarily show?

The Income Statement primarily shows profitability over time. This financial statement provides a summary of revenues, expenses, and profits or losses for a specific period, typically quarterly or annually. It allows stakeholders to assess how effectively a company is generating profit relative to its sales and operating costs.

By detailing revenues and expenses, the Income Statement demonstrates the company’s ability to manage costs and generate earnings, making it a critical tool for evaluating overall financial performance. Stakeholders, including management, investors, and analysts, use this information to make informed decisions about the company’s future, investment potential, and operational efficiency.

The other options do not accurately reflect the primary purpose of the Income Statement. While assets and liabilities relate to the Balance Sheet, cash inflows and outflows pertain to the Cash Flow Statement, and expenditures may be included as part of the expenses on the Income Statement, they do not encompass the report's ultimate focus on profitability.