What document summarizes income earned and expenses incurred over a trading period?

The income statement, also referred to as the profit and loss account, is the document that summarizes the income earned and expenses incurred during a specific trading period. This report provides a clear view of a company's profitability by listing revenues at the top, then deducting costs and expenses to arrive at net income (or loss) for the period.

The significance of the income statement lies in its ability to show how much profit a business has generated from its operations, which is crucial for assessing financial performance. Investors, management, and stakeholders examine this statement to understand the financial health of the business and to make informed decisions based on past performance and future projections.

While the balance sheet provides a snapshot of a company's financial position at a specific point in time, reflecting assets, liabilities, and equity, and the cash flow statement reveals the cash inflows and outflows, it is the income statement that primarily focuses on operational efficiency and profitability over a trading period.