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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.

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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.

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.

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VioletExpert · Tutor for 3 years

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'show the company's performance of a particular period of time.'

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## Step 1: <br />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'.<br /><br />## Step 2: <br />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.<br /><br />## Step 3: <br />"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.<br />"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.<br />"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.<br />"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.
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