ACCA Strategic Business Leader (SBL) Practice Exam

What document is required for a statement of comprehensive income?

1. Balance sheet

2. Cash flow statement

3. Profit and loss account

4. Directors' report

The correct answer is: Profit and loss account

The statement of comprehensive income is a financial report that summarizes the revenues, expenses, gains, and losses of an organization over a specific period, ultimately providing insight into its financial performance. The profit and loss account, also known as the income statement, is directly aligned with this purpose, as it details the company’s income and expenses, culminating in the profit or loss for the period. This financial document often forms part of the broader statement of comprehensive income, which not only includes these elements but can also account for other comprehensive income items, such as foreign currency translations and gains or losses on certain investments. Thus, the profit and loss account serves as a critical component of the overall statement, encapsulating the operational performance of the business. In contrast, a balance sheet presents the financial position of a company at a specific point in time, showing assets, liabilities, and equity, and does not provide information about performance over a period. A cash flow statement focuses on the inflows and outflows of cash within a given timeframe rather than the profitability of the entity. The directors' report offers insights and context pertaining to the company’s operations and strategy but is not a financial statement that details income and expenses. Therefore, the profit and loss account is essential for crafting a