Question

What criteria must each item meet in order to be listed on the Income Statement?

Answer 1

Each item listed on the Income Statement must meet criteria like relevance, measurability, reliability, and consistency.

Step-by-step explanation:

In order to be listed on the Income Statement, each item must meet certain criteria. The Income Statement is a financial statement that reports a company's revenue, expenses, and net income over a specific period of time.

The criteria for listing an item on the Income Statement generally include:

1. Relevance: The item must be relevant to the company's core operations or financial performance. For example, sales revenue and operating expenses are typically included.
2. Measurability: The item must be measurable in monetary terms. It should have a dollar value that can be recorded and analyzed.
3. Reliability: The item's value should be reliable and verifiable. It should be based on accurate data and supported by proper documentation.
4. Consistency: The item should be consistently treated and presented across different periods and in comparison to other companies.