Question

1. (2pts) Account classification #2:  Below are selected accounts of The Gathering Sound, Ltd.  For each account, write whether it would appear on their Income Statement as a Revenue (R) or as an Expense (E).  If the account would not appear on the income statement, write ‘Not on Income Statement (I/S)’ and briefly explain why it would not be included on the income statement:

Account title

Service revenue

Supplies

Wages Expense

Wages Payable

Dividends

Sales Revenue

Rent Expense

Retained Earnings

Utilities Expense

Accounts Payable

Answer 1

Account title--------------- Revenue/Expense/Not income statement item

Service revenue------------- Revenu and it is a income statement item

Supplies------------------------Not an Income statement item.A current asset representing the cost of supplies on hand at a point in time. The account is usually listed on the balance sheet after the Inventory account. A related account is Supplies Expense, which appears on the income statement.

Wages Expense--------------Expense and it is a income statement item

Wages Payable---------------It is not an income statement item because it neither revenue nor expense.it is current liability and shown under balance sheet

Dividends-----------------------It is not an income statement item.dividends reported on the statement of changes in stockholders' equity. Dividends on common stock are not reported on the income statement since they are notexpenses.

Sales Revenue----------------Revenue .

Rent Expense-----------------expense

Retained Earnings---------Retained earnings appear on a company's balance sheet. Retained earnings may also be published as a separate financial statement and, although not typically, can be listed on the Income statement. So it is not an income statement item.

Utilities Expense----------- expense

Accounts Payable--------Accounts payable are recognized on the balance sheet when the company buys goods or services on credit. So it not an income statement item.