Which of the following lists includes only items that appear on a classified balance sheet (not on the income statement or statement of cash flows)?

• A. Sales Revenue, Cost of Goods Sold, and Operating Expenses
• B. Cash, Accounts Receivable, and Accounts Payable
• C. Net Income, Depreciation Expense, and Interest Expense
• D. Cash Flow from Operations, Cash Flow from Investing, and Cash Flow from Financing

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the purpose of a classified balance sheet. It organizes assets, liabilities, and equity into subcategories such as current assets, long-term assets, current liabilities, long-term liabilities, and shareholders' equity.
2. Step 2: Identify which items belong to the balance sheet. These are typically accounts representing resources owned (assets), obligations owed (liabilities), and owners' claims (equity). Examples include Cash, Accounts Receivable, and Accounts Payable.
3. Step 3: Recognize that Sales Revenue, Cost of Goods Sold, Operating Expenses, Net Income, Depreciation Expense, and Interest Expense are components of the income statement, which reports profitability over a period.
4. Step 4: Understand that Cash Flow from Operations, Investing, and Financing are sections of the statement of cash flows, which shows cash inflows and outflows during a period.
5. Step 5: Conclude that only items representing assets and liabilities such as Cash, Accounts Receivable, and Accounts Payable appear on a classified balance sheet, while the other items belong to the income statement or statement of cash flows.