Which of the following items would be included on an income statement?

• A. Retained Earnings
• B. Net Income
• C. Accounts Payable
• D. Revenue

Answer: (D)

Verified step by step guidance

1. Understand the purpose of an income statement: It is a financial report that shows a company's financial performance over a specific period, including revenues, expenses, and resulting net income or loss.
2. Identify the components of an income statement: The key items include revenues, expenses, gains, losses, and net income. Retained earnings and accounts payable are not part of the income statement; they belong to other financial statements (retained earnings are part of the statement of retained earnings, and accounts payable are part of the balance sheet).
3. Clarify the term 'Revenue': Revenue represents the income earned from the sale of goods or services during the reporting period. It is a primary component of the income statement and is listed at the top of the statement.
4. Clarify the term 'Net Income': Net income is the result of subtracting total expenses from total revenues. It represents the company's profit or loss for the period and is included at the bottom of the income statement.
5. Exclude unrelated items: Retained earnings and accounts payable are not included on the income statement. Retained earnings reflect accumulated profits and are part of the equity section of the balance sheet, while accounts payable represent liabilities and are part of the balance sheet.