Which Of The Following Would Be Included On An Income Statement? (Choose All That Apply)

All those accounts which are closed or zero out at the end of the current accounting period are recorded in Income Statement i.e., all the Temporary Accounts or Income Statement Accounts / Items while those accounts which are closed at the end of the accounting period are not recorded in Income Statement but on the balance sheet as these are Permanent Accounts or Balance Sheet Accounts / Items. So, the correct options of this multiple choice question are D, F, H, I, J and L, as all of the revenue and expense accounts are temporary accounts (Revenues, Expenses, Income & Losses) and closed to Income Summary Account at the end of the accounting period. These accounts have no balances at the end of the accounting cycle so these are zero out.

Cost of Goods Sold or Cost of Sales (direct expense), Service Revenue, Net Income, Gas Expense, Utilities Expense and Salaries Expense are temporary accounts, so these should be included on Income Statement for the period. Net Income is shown in the income statement and it is the balance figure which is transferred to equity section on the balance sheet. So, net income is the link between the balance sheet and the income statement.

The options A, B, C, E, G and M are incorrect choices here as all of these items are balance sheet items or permanent accounts. Retained earnings is shown on equity section of the balance sheet.

Land is a fixed asset / non current asset and recorded on the balance sheet. Cash and accounts receivable both are current assets and recorded on left side or asset side of the balance sheet. Liabilities are shown on the right side or liabilities & equity side of the balance sheet. Stockholders’ Equity is also shown on the right side of the balance sheet.