If you sought a summary of business transactions, which financial tool would you refer to?

A profit-and-loss statement is the ideal financial tool to refer to when seeking a summary of business transactions. This statement, often referred to as an income statement, details the revenues, costs, and expenses incurred during a specific period. It allows businesses to assess their profitability by providing a clear picture of how much money was made and spent.

In contrast, other options serve different purposes:

• A balance sheet provides a snapshot of a company’s assets, liabilities, and equity at a specific point in time, rather than summarizing transactions over a period.

• Cash flow analysis focuses on the inflow and outflow of cash within the business, which is important for understanding liquidity but does not summarize overall transactions.

• A sales report typically highlights sales figures and trends but does not encompass all expenses and other income, providing a narrower view than a profit-and-loss statement.

Thus, the profit-and-loss statement is the most comprehensive tool for summarizing business transactions over a designated timeframe.