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

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

Answer: (B)

Verified step by step guidance

1. Understand the purpose of an income statement: It is a financial report that shows a company's revenues, expenses, and net income over a specific period. It does not include accounts related to assets, liabilities, or equity, which are found on the balance sheet.
2. Identify the types of accounts typically found on an income statement: These include revenue accounts (e.g., Service Revenue, Sales Revenue) and expense accounts (e.g., Rent Expense, Salaries Expense).
3. Analyze each account provided in the problem: Prepaid Expenses are an asset account and are not included on the income statement. Retained Earnings are part of equity and appear on the balance sheet, not the income statement. Accounts Payable is a liability account and also appears on the balance sheet.
4. Recognize that Service Revenue is a revenue account, which is included on the income statement as it contributes to the calculation of net income.
5. Conclude that the correct account typically found on an income statement is Service Revenue, as it aligns with the purpose and structure of the income statement.