Which of the following accounts does NOT appear on a classified balance sheet?

• A. Service Revenue
• B. Prepaid Insurance
• C. Accounts Payable
• D. Retained Earnings

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the structure of a classified balance sheet. It organizes assets, liabilities, and equity into specific categories such as current assets, long-term assets, current liabilities, long-term liabilities, and shareholders' equity.
2. Step 2: Identify the nature of each account given: Prepaid Insurance is an asset (specifically a current asset), Accounts Payable is a current liability, Retained Earnings is part of shareholders' equity, and Service Revenue is an income statement account representing revenues earned.
3. Step 3: Recall that a classified balance sheet only includes balance sheet accounts, which are assets, liabilities, and equity accounts. Revenue accounts like Service Revenue do not appear on the balance sheet; they appear on the income statement.
4. Step 4: Conclude that among the options, Service Revenue is the only account that does NOT appear on a classified balance sheet because it is a revenue account, not an asset, liability, or equity account.
5. Step 5: Therefore, when asked which account does not appear on a classified balance sheet, the correct answer is the revenue account, Service Revenue.