Profit and Loss Account shows a business's profit or loss over a period of time (6-12 months).

• A. Balance Sheets
• B. Cash Flows
• C. Profit and Loss Account
• D. Assets and liabilities

Answer: (C)

This question tests understanding of which financial statement shows profit or loss over a period. The Profit and Loss Account, also called the income statement, records all revenues earned and expenses incurred over a period (for example, six to twelve months) and shows the net profit or loss for that period. It focuses on performance over time, not position.

A Balance Sheet, by contrast, shows the business’s financial position at a point in time—what it owns (assets) and what it owes (liabilities and equity). A Cash Flows statement tracks the actual cash inflows and outflows during the period, highlighting liquidity rather than profitability. Assets and liabilities are components of the Balance Sheet, not a statement that directly reports profit or loss.

So, the Profit and Loss Account is the one that shows profit or loss over the period.