Which of the following items is reported on a company’s income statement?

• A. Retained earnings
• B. Sales revenue
• C. Accounts payable
• D. Common stock

Answer: (B)

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, expenses, gains, and losses to calculate net income.
2. Step 2: Identify the nature of each item listed: Retained earnings represent accumulated profits kept in the company and appear on the statement of retained earnings or balance sheet, not the income statement.
3. Step 3: Recognize that sales revenue is the income generated from the company's primary business activities and is a key component of the income statement.
4. Step 4: Note that accounts payable is a liability representing amounts owed to suppliers and is reported on the balance sheet, not the income statement.
5. Step 5: Understand that common stock represents ownership equity and is reported on the balance sheet under shareholders' equity, not on the income statement.