Question
Question 5 The main purpose of the statement of profit or loss is to __ show the company's performance of a particular period of time. show the capital generated in the company over a particular time period show the cash movements over a particular period. show the main classifications of assets and liabilities used by accountants.
Answer
4
(201 Votes)
Violet
Expert · Tutor for 3 years
Answer
'show the company's performance of a particular period of time.'
Explanation
## Step 1: To determine the main purpose of the statement of profit or loss, we need to analyze each statement and evaluate its relevance to the definition of 'statement of profit or loss'.## Step 2: Statement of profit or loss (also referred to as the income statement) exhibits the company's revenue and expenses during a particular period of time leading to the profit or loss.## Step 3: "Why the company's performance over a particular period of time relates to 'the statement of profit or loss'" - This option perfectly fits with the definition that the profit or loss statement reflects the financial performance of a company over a specified timeframe."Why the capital generated in the company over a particular time period does not relate to 'the statement of profit or loss'" - This option discusses capital generation which is not a part of the profit or loss statement directly."Why the cash movements over a particular period not relate to 'the statement of profit or loss'" - This looks like cash flow statement and doesn't have all revenue and expenses like profit and loss statement."Why too the main classifications of assets and liabilities used by accountants not relate to 'the statement of profit or loss'" - This pertains more to the balance sheet than the profit or loss statement.