Which report organizes financial transactions and assists in financial analysis?

The Profit and Loss report, also known as the income statement, is designed to summarize a company's revenues and expenses over a specific period. This report is crucial for understanding the financial performance of a business, as it allows users to see how much money the company has earned (revenue) and how much it has spent (expenses). By providing a clear overview of profits or losses during a particular timeframe, this report enables stakeholders—such as management, investors, and analysts—to evaluate the financial health of the organization, identify trends, and make informed decisions for future planning.

In contrast, other reports serve different purposes. The Balance Sheet report presents a snapshot of a company’s assets, liabilities, and equity at a single point in time, focusing primarily on financial position rather than performance over a period. An Expense report details individual spending and may be used for reimbursement or tracking purposes, but it doesn't give a holistic view of overall profitability. Lastly, a Sales report concentrates on sales performance and revenue generation, but it does not provide insights into expenditures or costs involved in generating that revenue, which is key for comprehensive financial analysis.