Which financial statement is most likely to reflect comprehensive income?

The statement of comprehensive income is specifically designed to reflect all income and expenses of a company during a specific period, including both net income and other comprehensive income items. This encompasses revenues, expenses, gains, and losses that are not included in the income statement but affect equity.

The statement of changes in equity serves as a bridge between the comprehensive income presented and the changes in equity from one accounting period to the next. It effectively connects the comprehensive income for the period with how that income impacts the owners’ equity by detailing transactions like dividends, share issues, and movements resulting from comprehensive income items such as unrealized gains/losses on investments or foreign currency translation adjustments.

In contrast, the other statements focus on different aspects of financial performance or position. The statement of cash flows presents cash movements and liquidity, the overhead budget details estimates of overhead costs for operational planning, and the statement of financial position provides a snapshot of the company’s assets, liabilities, and equity at a specific point in time. None of these directly encompass the concept of comprehensive income as thoroughly as the statement of changes in equity.