Which item is reported in an income statement?

Which item is reported in an income statement?

• A. Revenues
• B. Accounts payable
• C. Cash
• D. Building

Answer: (A)

Revenues are reported on the income statement because that statement shows the company’s performance over a period, listing the amounts earned from selling goods or providing services and the costs tied to earning those revenues. Revenues, minus expenses, determine net income. The other items are balance sheet items: accounts payable is a liability owed to suppliers, cash is an asset, and building is a long-term asset. They appear on the balance sheet, not the income statement. So the item that appears on the income statement is revenues.

Revenues are reported on the income statement because that statement shows the company’s performance over a period, listing the amounts earned from selling goods or providing services and the costs tied to earning those revenues. Revenues, minus expenses, determine net income. The other items are balance sheet items: accounts payable is a liability owed to suppliers, cash is an asset, and building is a long-term asset. They appear on the balance sheet, not the income statement. So the item that appears on the income statement is revenues.