How would it be easier to determine if a firm made or lost money last year-by looking at the balance sheet or by looking at the income statement? Support your answer by explaining in general terms what accounts a balance sheet lists and what accounts an income statement lists

The quickest way to determine if a firm is profitable or not would be to examine a company's income statement since an income statement is a summary of the firm's revenues, cost of goods sold, and expenses during a specified accounting period-usually a one year period. A balance sheet is just a snapshot in time and reflects the financial position of the company in terms of assets, liabilities, and owners' equity at one point in time. Students may also include the fact that both the income statement and balance sheet (along with a firm's statement of cash flows) are included in a firm's annual report.