Multiple Choice
Which of the following statements about the statement of stockholders’ equity is true?
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1. Introduction to Accounting
The Financial Statements
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Which one of the following items is NOT found on a balance sheet?
A
Sales Revenue
B
Accounts Receivable
C
Notes Payable
D
Retained Earnings
Verified step by step guidance1
Step 1: Understand the purpose of a balance sheet. A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It includes assets, liabilities, and equity.
Step 2: Identify the components of a balance sheet. Assets include items like cash, accounts receivable, and inventory. Liabilities include obligations such as notes payable and accounts payable. Equity includes items like retained earnings and common stock.
Step 3: Recognize that sales revenue is part of the income statement, not the balance sheet. The income statement reports a company's financial performance over a period of time, including revenues and expenses.
Step 4: Compare the given options to the components of a balance sheet. Accounts receivable is an asset, notes payable is a liability, and retained earnings is part of equity. Sales revenue, however, is not part of the balance sheet.
Step 5: Conclude that the item NOT found on a balance sheet is sales revenue, as it belongs to the income statement instead.
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