{"id":149932,"date":"2024-10-08T05:44:42","date_gmt":"2024-10-08T05:44:42","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=149932"},"modified":"2024-10-08T05:44:45","modified_gmt":"2024-10-08T05:44:45","slug":"which-accounts-are-found-on-an-income-statement","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2024\/10\/08\/which-accounts-are-found-on-an-income-statement\/","title":{"rendered":"Which account(s) are found on an income statement"},"content":{"rendered":"\n

Which account(s) are found on an income statement?
A. Accumulated depreciation
B. Checking
C. Cost of goods sold
D. Owner’s equity
E. Loan payable<\/p>\n\n\n\n

The correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n

The correct answer is C. Cost of goods sold (COGS)<\/strong>.<\/p>\n\n\n\n

An income statement, also known as the profit and loss statement, details a company’s revenues, expenses, and net income or loss over a specific period of time. It focuses on the company’s profitability by showing the revenues earned and the costs incurred in generating those revenues.<\/p>\n\n\n\n

Here’s a detailed explanation of why Cost of Goods Sold (COGS)<\/strong> appears on the income statement and why the other accounts do not:<\/p>\n\n\n\n

1. Cost of Goods Sold (COGS)<\/strong><\/h3>\n\n\n\n
    \n
  • COGS<\/strong> represents the direct costs attributable to the production or purchase of the goods sold by a business. This includes raw materials, labor, and manufacturing overhead that are directly tied to producing the products or services sold during the accounting period. Since COGS is a direct expense tied to revenue generation, it is reported on the income statement to calculate gross profit (Revenue – COGS = Gross Profit).<\/li>\n<\/ul>\n\n\n\n

    2. Accumulated Depreciation (A)<\/strong><\/h3>\n\n\n\n
      \n
    • Accumulated depreciation<\/strong> is a contra-asset account that records the cumulative depreciation of an asset over time. It is reported on the balance sheet under the asset section and reflects the wear and tear on assets over time, but it is not directly linked to the revenues and expenses presented in the income statement.<\/li>\n<\/ul>\n\n\n\n

      3. Checking Account (B)<\/strong><\/h3>\n\n\n\n
        \n
      • A checking account<\/strong> is a type of bank account used for day-to-day transactions and is considered a current asset. It is shown on the balance sheet under the assets section, not on the income statement, since it represents liquidity, not profitability.<\/li>\n<\/ul>\n\n\n\n

        4. Owner’s Equity (D)<\/strong><\/h3>\n\n\n\n
          \n
        • Owner’s equity<\/strong> refers to the residual interest in the assets of a business after liabilities are deducted. It is reported on the balance sheet and represents the owners\u2019 share of the company. It is not part of the income statement.<\/li>\n<\/ul>\n\n\n\n

          5. Loan Payable (E)<\/strong><\/h3>\n\n\n\n
            \n
          • Loan payable<\/strong> is a liability that represents money a business owes to lenders. Like owner\u2019s equity, it appears on the balance sheet under liabilities, not on the income statement, because it relates to the company\u2019s financial obligations, not its profitability.<\/li>\n<\/ul>\n\n\n\n

            In summary, COGS<\/strong> is an expense related to revenue generation and is reported on the income statement, while the other accounts (accumulated depreciation, checking account, owner\u2019s equity, loan payable) are balance sheet items, which reflect a company’s financial position but not its operational profitability.<\/p>\n","protected":false},"excerpt":{"rendered":"

            Which account(s) are found on an income statement?A. Accumulated depreciationB. CheckingC. Cost of goods soldD. Owner’s equityE. Loan payable The correct Answer and Explanation is: The correct answer is C. Cost of goods sold (COGS). An income statement, also known as the profit and loss statement, details a company’s revenues, expenses, and net income or […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-149932","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/149932","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=149932"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/149932\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=149932"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=149932"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=149932"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}