Which of the following sets of accounts is typically found on an income statement?

• A. Revenues and expenses (e.g., Sales Revenue, Cost of Goods Sold, and Salaries Expense)
• B. Assets, liabilities, and stockholders’ equity (e.g., Cash, Accounts Payable, and Common Stock)
• C. Owner withdrawals and contributed capital accounts (e.g., Dividends and Additional Paid-in Capital)
• D. Operating, investing, and financing cash flow accounts (e.g., Cash received from customers, Purchase of equipment, and Issuance of debt)

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the purpose of the income statement. The income statement reports a company's financial performance over a specific period, focusing on revenues and expenses to determine net income or loss.
2. Step 2: Identify the types of accounts typically included on the income statement. These are accounts that measure inflows and outflows related to operations, such as Revenues (e.g., Sales Revenue) and Expenses (e.g., Cost of Goods Sold, Salaries Expense).
3. Step 3: Recognize that assets, liabilities, and stockholders' equity accounts (e.g., Cash, Accounts Payable, Common Stock) are part of the balance sheet, not the income statement.
4. Step 4: Note that owner withdrawals (like Dividends) and contributed capital accounts (like Additional Paid-in Capital) relate to equity transactions and are reported in the statement of retained earnings or equity, not the income statement.
5. Step 5: Understand that operating, investing, and financing cash flow accounts are reported in the statement of cash flows, which is separate from the income statement.