Question

Consider the following account balances of the SOUR CREAM LAW FIRM at the end of the year: Accounts Payable $4,400 Salaries Expense 12,800 Cash 1,700 Common Stock 2,400 Service Revenue 8,300 Supplies 4,300 Retained Earnings 1,100 Utilities Expense 5,000 How many of these accounts would appear in SOUR CREAM's year-end income statement?

Answer 1

Three accounts would appear on the income statement of the company at the end of the year.

Step-by-step explanation:

‘Balance Sheet’ shows the liabilities, assets and equity of a company at a particular point of time. Assets are the items that the company own, liability is the obligation of the company and equity is the net assets, i.e., the difference between the assets and the liabilities.

The following items would appear on the balance sheet:

1. Accounts Payable $4,400
2. Cash $1,700
3. Common Stock $2,400
4. Supplies $4,300
5. Retained Earnings $1,100

‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period.

The following items would appear on the income statement:

1. Salaries Expense $12,800
2. Service Revenue $8,300
3. Utilities Expense $5,000