Under certainty condition we dont need IS to get the net inc

Under certainty condition, we don\'t need I/S to get the net income or earnings. However, in reality, we need it because we cannot perfectly forecast future cash flows and discount rate (cost of equity). Thus, in practice I/S should show the information for future cash flows and risk level of firm.

True

False

Solution

False.

Income statement is prepared for the immedietely preceding accountinf period and not for future periods.

Even though the period and the activities are known they need some adjustments which are to be carried out to get the correct net income or earnings, for which income statement is prepared.