Which of the following line items appears on an income statement?

• A. Inventory
• B. Revenue
• C. Accounts Payable
• D. Retained Earnings

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 profits over a specific period. It does not include items related to assets, liabilities, or equity, which are found on the balance sheet.
2. Review the provided options: Inventory, Revenue, Accounts Payable, and Retained Earnings. Determine which of these items are related to the income statement.
3. Recognize that 'Revenue' is a key component of the income statement. Revenue represents the income generated from the sale of goods or services during the reporting period.
4. Identify why the other options do not belong on the income statement: Inventory is an asset and appears on the balance sheet; Accounts Payable is a liability and also appears on the balance sheet; Retained Earnings is part of equity and is reported on the statement of retained earnings or balance sheet.
5. Conclude that the correct answer is 'Revenue,' as it directly relates to the income statement and reflects the company's earnings during the period.