We discuss the relationship between the physical evolution of discrete extragalactic sources, the statistical evolution of the observed population of sources, and the cosmological model. Three simple forms of statistical evolution - pure luminosity evolution (PLE), pure density evolution (PDE), and generalized luminosity evolution (GLE) - are considered in detail together with what these forms imply about the physical evolution of individual sources. Two methods are used to analyze the statistical evolution of the observed distribution of QSOs from combined flux-limited samples. It is shown that both PLE and PDE are inconsistent with the data over the redshift range 0.2 < z < 2.2 and that a more complicated form of evolution such as GLE is required, independent of the cosmological model. This result is important for physical models of AGN, and in particular, for the accretion disk model which recent results show may be inconsistent with PLE.