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In financial reporting, performance is primarily measured by net income and its components, which are presented in the income statement. A second performance measure—comprehensive income—is a more inclusive notion of performance than net income. It includes all recognized changes in equity that occur during a period except those resulting from investments by owners and distributions to owners.

Because comprehensive income includes the effects on an entity of economic events largely outside of management's control, some have said that net income is a measure of management's performance and comprehensive income is a measure of entity performance.

In contrast to the statement of financial position, which provides information about an entity at a point in time, an income statement provides information about a period of time. It reflects information about the transactions and other events occurring within the period. Most of the weaknesses of an income statement are a result of its periodic nature. Entities are continually creating and selling goods and services, and at any single point in time some of those processes will be incomplete.