Which of the following appear(s) on the Income Statement?
I. Interest revenue.
II. Depreciation of a machinery.
III. Employee payroll taxes payable.
IV. Commissions earned by sales staff.
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A. B. C. D.B
Employee payroll taxes payable are a current liability.
On the Income Statement, also known as the Statement of Income or Profit and Loss Statement, a company reports its revenues, expenses, gains, and losses over a specific period of time. It helps assess the profitability of a business and provides information about its operating performance.
Let's analyze each option to determine which items appear on the Income Statement:
I. Interest revenue: Interest revenue represents the income earned by a company from its interest-bearing investments, such as interest earned on loans or bonds. Interest revenue is considered a part of the operating revenue and appears on the Income Statement.
II. Depreciation of machinery: Depreciation is an accounting method used to allocate the cost of a tangible asset, such as machinery, over its useful life. While depreciation affects a company's financials, it is not directly reflected on the Income Statement. Instead, depreciation expense is reported on the Income Statement as part of the operating expenses, which reduces the company's net income.
III. Employee payroll taxes payable: Payroll taxes are the taxes that employers are required to withhold and remit to government authorities based on employees' wages. These taxes typically include Social Security, Medicare, and unemployment taxes. Employee payroll taxes payable are not part of the Income Statement. They are recorded as a liability on the Balance Sheet until they are paid to the appropriate authorities.
IV. Commissions earned by sales staff: Commissions earned by the sales staff are a form of revenue generated by the company's sales activities. Commissions earned by the sales staff represent a portion of the revenue from sales transactions, and therefore, they are part of the operating revenue. Commissions earned appear on the Income Statement.
Based on the analysis above, the items that appear on the Income Statement are: I. Interest revenue (part of operating revenue) IV. Commissions earned by sales staff (part of operating revenue)
Therefore, the correct answer is: C. II & IV