Multiple Choice
Which financial statement primarily captures information about a company's sales revenue?
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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
Accounts Receivable
B
Service Revenue
C
Inventory
D
Retained Earnings
Verified step by step guidance1
Step 1: Understand the structure of a balance sheet. A balance sheet is a financial statement that reports a company's assets, liabilities, and equity at a specific point in time. It is divided into three main sections: Assets, Liabilities, and Equity.
Step 2: Identify the accounts listed in the problem and categorize them. Accounts Receivable and Inventory are asset accounts, while Retained Earnings is an equity account. These are all part of the balance sheet.
Step 3: Recognize that Service Revenue is not part of the balance sheet. Service Revenue is an income statement account, which reports the company's revenues and expenses over a period of time, not at a specific point in time.
Step 4: Confirm that Service Revenue does not fit into the categories of assets, liabilities, or equity, which are the components of the balance sheet.
Step 5: Conclude that Service Revenue is the correct answer because it is not a balance sheet account, but rather an income statement account.
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