Final answer:
The income statement measures and reports the financial results of a firm's performance for a period of time.
Step-by-step explanation:
The income statement measures and reports the financial results of a firm's performance for a period of time.
It shows the profits (or losses) the firm has generated during the period by conducting operating, investing, and financing activities. It does not directly measure net cash flows, but it provides information on revenues, expenses, and net income which can help assess the overall financial health of the firm.
For example, if a company's income statement shows high revenues and low expenses, it indicates that the company has generated profits. On the other hand, if the income statement shows low revenues and high expenses, it indicates that the company has incurred losses.