1. Understand the uses and limitation of an income statement. The income statement provides investors and creditors with information that helps them predict the amounts, timing and uncertainty of future cash flows. Also, the income statement helps users determine the risk (level of uncertainty) of not achieving particular cash flows. The limitation of an income statement are (1) The statement does not include many items that contribute to general growth and well-being of a company. (2) Income numbers are often affected by accounting methods used. (3) Income measures are subject to estimates.