Multiple Choice
On which of the four major financial statements would you find the amounts for common stock and paid-in surplus?
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1. Introduction to Accounting
The Financial Statements
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following line items appears on a balance sheet?
A
Cost of Goods Sold
B
Sales Revenue
C
Dividends Declared
D
Accounts Receivable
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 three main sections: assets, liabilities, and equity.
Step 2: Identify the nature of each line item provided in the question. Cost of Goods Sold and Sales Revenue are part of the income statement, as they relate to the company's performance over a period of time. Dividends Declared are part of the statement of retained earnings, as they represent distributions to shareholders.
Step 3: Recognize that Accounts Receivable is an asset. Accounts Receivable represents money owed to the company by customers for goods or services provided on credit. Assets are listed on the balance sheet.
Step 4: Confirm that Accounts Receivable appears under the 'Assets' section of the balance sheet. It is typically classified as a current asset because it is expected to be converted into cash within one year.
Step 5: Conclude that Accounts Receivable is the correct answer because it is the only item among the options provided that appears on the balance sheet.
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