Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Which of the following is NOT a revenue account that appears on the income statement?

Service Revenue

Interest Revenue

Sales Revenue

Sales Returns and Allowances

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Verified step by step guidance

Step 1: Understand the concept of revenue accounts. Revenue accounts represent the income earned by a business from its operations, such as providing services, selling goods, or earning interest. These accounts appear on the income statement and contribute to the calculation of net income.

Step 2: Review the provided options. The options include Service Revenue, Interest Revenue, Sales Revenue, and Sales Returns and Allowances. Each of these terms needs to be evaluated to determine whether it qualifies as a revenue account.

Step 3: Analyze the term 'Sales Returns and Allowances.' This account does not represent income earned by the business. Instead, it is a contra-revenue account, which means it reduces the total revenue. It records the value of goods returned by customers or allowances granted for defective goods, and it is subtracted from Sales Revenue on the income statement.

Step 4: Compare 'Sales Returns and Allowances' with the other options. Service Revenue, Interest Revenue, and Sales Revenue are all revenue accounts that contribute positively to the income statement, whereas Sales Returns and Allowances reduces revenue.

Step 5: Conclude that 'Sales Returns and Allowances' is NOT a revenue account that appears on the income statement. It is a contra-revenue account and serves a different purpose in financial reporting.