Final answer:
The statement reporting net income or loss for a specific time period is the income statement. It details a company's revenues and expenses to show net income or loss. It's also critical for determining the taxable income and the effective tax rate companies pay.
Step-by-step explanation:
The statement that reports net income or loss for a certain period in time is the income statement. This financial document provides a summary of how a company earns and spends money over a specific period, usually quarterly or annually. It starts by listing the revenue earned, followed by the costs and expenses incurred in generating that revenue. The bottom line of the income statement shows the net income, which is the revenue left after all expenses have been subtracted. If the expenses exceed the revenue, the statement will instead report a net loss.
Corporate tax calculations are based on the net taxable income reported in the financial statement. Companies typically disclose their effective tax rate, which is the average rate applied to their income after considering the current year's tax benefits. It is important to understand the interplay between net income and taxes, as they directly affect each other. Corporations use the income statement to calculate the income upon which they will be taxed by various jurisdictions.
Drawing a larger picture, on a governmental level, the concepts of revenue and expenses are also crucial. These come together in the federal budget, where an annual budget deficit or surplus is calculated. This calculation is the difference between the tax revenue collected and the spending over the fiscal year, which is from October 1 to September 30 of the following year.