Which financial statement is used to determine a business' loss of Net Income?

The Profit and Loss statement, often referred to as the income statement, is designed to summarize a business's revenues, costs, and expenses during a specific period. By examining this statement, an adjuster can assess the company’s financial performance, including its net income, which is the profit left over after all expenses are deducted from total revenue.

When evaluating a business's loss of net income, the Profit and Loss statement reveals critical information about how much money the business actually made versus what it spent. In the context of insurance and claims, understanding the changes in net income can be vital in accurately assessing a business interruption loss.

The other financial documents serve different purposes. The balance sheet provides a snapshot of a company's assets, liabilities, and equity at a specific point in time, but it does not reflect income over a period. The cash flow statement offers insights on the cash that flows in and out of the business yet does not provide details on profitability or net income. The income tax return, while it does show taxable income, can be influenced by various deductions and may not accurately reflect operational performance for the specific period in question. Therefore, for determining a loss of net income, the Profit and Loss statement is the most appropriate and relevant financial statement.