Final answer:
An income statement does not report a firm's cumulative revenues and expenses from inception, but rather over a specific accounting period. The statement is false. The income statement includes total revenue and profit calculations, reflecting the firm's financial performance for that period.
Step-by-step explanation:
The statement that an income statement reports a firm's cumulative revenues and expenses from the inception of the firm through the income statement date is false. In reality, an income statement reflects the revenues and expenses over a specific accounting period, such as a month, a quarter, or a year, rather than from the firm's inception. Revenue is recognized when earned and expenses are matched to the period in which they occur, which allows for the measurement of a firm's performance during that time.
There are key components on an income statement like total revenue which is calculated by the formula: Total Revenue = Price x Quantity, representing the income from selling the firm's products. Another key calculation shown is profit, which is determined by subtracting the total costs incurred for producing and selling the product from the total revenue, shown as Profit = Total Revenue - Total Cost. This provides insight into the firm's profitability during the specified period.