Multiple Choice
Section three of a business plan typically describes which of the following?
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1. Introduction to Accounting
The Financial Statements
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Which of the following is NOT a balance sheet account?
A
Inventory
B
Retained Earnings
C
Accounts Receivable
D
Service Revenue
Verified step by step guidance1
Step 1: Understand the structure of the balance sheet. The balance sheet is a financial statement that reports a company's assets, liabilities, and equity at a specific point in time. It includes accounts that represent the financial position of the company.
Step 2: Identify the types of accounts typically found on a balance sheet. These include asset accounts (e.g., Inventory, Accounts Receivable), liability accounts (e.g., Accounts Payable), and equity accounts (e.g., Retained Earnings).
Step 3: Recognize that Service Revenue is not a balance sheet account. Service Revenue is part of the income statement, which reports a company's revenues and expenses over a period of time. Revenue accounts reflect the company's earnings from operations, not its financial position.
Step 4: Compare the given options to the categories of balance sheet accounts. Inventory and Accounts Receivable are asset accounts, while Retained Earnings is an equity account. Service Revenue does not fit into any of these categories because it is an income statement account.
Step 5: Conclude that Service Revenue is the correct answer to the question, as it is not a balance sheet account.
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