Identify the item that will not be reported on a classified
Answer to Problem 1SSQ
Option (b): Net income
Explanation of Solution
Classified balance sheet: The main elements of balance sheet assets, liabilities, and
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
Net income: The bottom line of income statement which is the result of excess of earnings from operations (revenues) over the costs incurred for earning revenues (expenses) is referred to as net income.
Justification for the given options:
Option (a): current assets
Current assets are the component of the balance sheet and part of the total assets. Thus, it is reported on the classified balance sheet.
Option (b): Net income
Net income is a component of the income statement. Hence, it is reported on the income statement but not on the classified balance sheet.
Option (c): Total liabilities
Total liabilities are the component of the balance sheet and it is a sum of current and long term liabilities. Thus, it is reported on the classified balance sheet.
Option (d): Common stock
Common stock is a component of balance sheet and reported under the head of stockholders’ equity of the classified balance sheet.
Hence, Option (b) Net income is the correct answer.
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Chapter 4 Solutions
Financial Accounting for Undergr. -Text Only (Instructor's)
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