What is the primary function of the income statement?

The primary function of the income statement is to report a company's revenues and expenses over a specific period. This financial statement provides a summary of how much money a company has earned (revenues) and how much it has spent (expenses) during that time frame, typically covering a quarter or a year. This information is vital for stakeholders to assess the company’s profitability and performance over the specified period.

The income statement reflects the fundamental concept of matching revenues with the related expenses incurred to generate those revenues, which is essential for understanding the company's operational efficiency. By analyzing this information, investors, management, and other stakeholders can make informed decisions regarding the company's financial health and future prospects.