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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Which of the following accounts would not be listed in the Income Statement column(s) of the work sheet?

  1. a. Income Summary
  2. b. Freight In
  3. c. Sales Returns and Allowances
  4. d. Purchases Discounts
  5. e. Merchandise Inventory

To determine

Identify the accounts which would not be listed in the income statement column.

Explanation

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.

Justification for the correct answer:

  • Option (e) Merchandise inventory is an asset account. It is listed in the balance sheet of the company. Therefore, option (e) is a correct answer.

Justification for the incorrect answer:

  • Option (a) Income summary is the owner’s equity account.  Income summary account is the only account in which we don’t combine the debit and credit balance...

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