What are the main components of an income statement?

The main components of an income statement include revenues, expenses, income, gains, and losses. The income statement is a financial report that summarizes a company's performance over a specific period, typically detailing how much money the company made (revenues) and how much it spent (expenses) in generating that income.

Revenues represent the total income generated from sales of goods or services before any costs or expenses are deducted. Expenses are the costs incurred in the process of earning revenues; they include various operating costs, salaries, and other expenditures.

Income reflects the net result of subtracting total expenses from total revenues. Additionally, gains and losses can arise from non-operational activities, such as the sale of asset investments or other unexpected occurrences. These components work together to provide a clear picture of a company's financial performance, allowing stakeholders to assess profitability and operational efficiency.

The other options present different facets of financial reporting but do not capture the essential elements specific to an income statement. For example, assets, liabilities, and equity are components of a balance sheet, while investments and distributions to owners pertain to equity transactions and financing, not operating results. Beginning inventory and purchases relate more to the calculation of the cost of goods sold than to the summary of income and expenses