What is an income statement used for?

An income statement serves as a financial report that summarizes a company's revenues and expenses over a specific period, typically a quarter or a year. Its primary purpose is to provide insights into the company's profitability by showing how much money was earned (revenues) and how much was spent (expenses) during the given time frame. This allows stakeholders, such as investors, management, and analysts, to evaluate the company's financial performance and understand its operational efficiency.

While other choices suggest important aspects of financial reporting, they do not accurately describe the function of an income statement. For instance, outlining a company's long-term strategy relates more to strategic planning documents rather than financial statements. Similarly, daily cash flows are depicted in a cash flow statement, which focuses on the inflows and outflows of cash rather than revenues and expenses. Future financial performance projections are typically found in forecasts or budgets, not in an income statement that reflects past performance.