Which financial statement reflects the income and expenses of a company's operations?

The Profit and Loss statement, often referred to as the Income Statement, is specifically designed to provide a detailed account of a company's revenues and expenses over a specific period. This financial statement summarizes the earnings generated from operations and the costs associated with those operations, ultimately reflecting the net profit or loss for that period.

This statement is crucial for understanding the operational performance of the company, as it provides insights into how effectively the organization is generating revenue and managing its expenses. By analyzing the Profit and Loss statement, stakeholders can assess profitability, cost management, and overall financial health.

In contrast, the balance sheet provides a snapshot of a company's assets, liabilities, and equity at a specific point in time, rather than detailing operational performance over a period. The cash flow statement focuses on the cash inflows and outflows from operational, investing, and financing activities, highlighting liquidity rather than profitability. The equity statement outlines changes in equity through contributions and distributions, not operational income and expenses. Hence, the Profit and Loss statement stands out as the key document for assessing the income and expenses associated with a company's operations.