Preparing Comprehensive Income Statement for Magician Co.

What is the purpose of a statement of comprehensive income?

A. To summarize the company's performance for the accounting period.

Answer:

The statement of comprehensive income is a financial statement that shows the company's profits over a given period of time. It includes both the operating and non-operating revenues and expenses, gains, and losses. The statement of comprehensive income summarizes the company's performance for the accounting period.

The statement of comprehensive income is crucial for investors, creditors, and other stakeholders as it provides a clear picture of the company's financial health and profitability. It helps in analyzing the company's revenue, expenses, and overall performance over a specific period.

By detailing the various sources of income and expenses, the statement of comprehensive income allows stakeholders to make informed decisions about the company's financial position and future prospects.

Moreover, the statement of comprehensive income is essential for assessing the company's ability to generate profits, manage expenses, and meet its financial obligations. It serves as a key tool for evaluating the company's financial performance and guiding strategic decision-making.

Overall, the statement of comprehensive income plays a significant role in providing transparency and accountability in financial reporting, enabling stakeholders to assess the company's financial performance and make informed investment decisions.