In preparing a classified balance sheet using a work sheet, in which column is net income recorded?

• A. Income Statement Debit column
• B. Balance Sheet Debit column
• C. Balance Sheet Credit column
• D. Income Statement Credit column

Answer: (C)

Verified step by step guidance

1. Understand the purpose of a classified balance sheet: It organizes assets, liabilities, and equity into categories to provide a clear financial position of the company.
2. Recognize that net income is derived from the income statement and represents the company's profit for the period.
3. Net income increases the equity section of the balance sheet because it contributes to retained earnings, which is part of stockholders' equity.
4. In the work sheet, net income is recorded in the Balance Sheet Credit column because it increases equity, which is a credit account in accounting.
5. Verify the placement by ensuring that the income statement and balance sheet columns are balanced, reflecting the proper flow of net income into equity.