What financial statement is directly linked to net income?

The income statement is directly linked to net income because it is the financial statement that summarizes revenues and expenses over a specific period. This summary culminates in the calculation of net income, which represents the profit or loss of the company after all revenues have been recognized and all expenses have been deducted. The income statement lays out the details of how much money was earned and how much was spent, making net income a critical figure that reflects the company's operational performance during that timeframe.

While the statement of cash flows, balance sheet, and statement of shareholders’ equity all provide valuable financial information, they do not directly calculate or summarize net income. The statement of cash flows details cash inflows and outflows, the balance sheet shows the company's assets, liabilities, and equity at a particular point in time, and the statement of shareholders' equity reflects changes in equity over time. Each of these statements feeds into or is influenced by net income, but the income statement is the document where net income is derived.