Which of the following items would NOT be found on a company's income statement?

• A. Cost of goods sold
• B. Ending retained earnings
• C. Interest expense
• D. Service revenue

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the purpose of the income statement. The income statement summarizes a company's revenues and expenses over a specific period, showing the company's profitability.
2. Step 2: Identify typical items found on the income statement. These usually include revenues (e.g., service revenue), expenses (e.g., cost of goods sold, interest expense), gains, and losses.
3. Step 3: Recognize that 'Ending retained earnings' is not an income or expense but rather a balance sheet item representing accumulated profits retained in the business after dividends.
4. Step 4: Recall that retained earnings are updated through the statement of retained earnings, which links net income from the income statement to the balance sheet, but the ending retained earnings figure itself does not appear on the income statement.
5. Step 5: Conclude that among the options, 'Ending retained earnings' would NOT be found on the income statement, while cost of goods sold, interest expense, and service revenue would be included.