Question
Which of the following should appear in the income statement? Bank loan Motor vehicles Trade payables Salaries and wages Property, plant and equipment Mortgage Trade receivables Plant and Machinery
Answer
3.5
(218 Votes)
Cara
Professional · Tutor for 6 years
Answer
Salaries and wages
Explanation
## Step 1:Understand the context, which here is what items belong in an income statement. The income statement is a financial statement that summarizes a company's revenues and expenses during a specific period of time. It represents how revenue that a company earns transforms into net income via costs incurred.## Step 2:Enumerate the categories of costs found in an income statement. There are mostly costs and revenues found in an income statement. Keep in mind your dividends and return on investment will not appear on the income statement. This includes the cost of goods sold (COGS), operating expenses, tax expenses, interest expenses, and potentially more. ## Step 3:Identify the items within the contexts. 'Bank loan', 'Motor vehicles', 'Property, plant and equipment', 'Mortgage', 'Trade receivables', 'Plant and Machinery' are all balance sheet items. They represent assets (such as machinery, property or motor vehicles), and liabilities (bank loan, mortgage or trade payables); however, they do not feature on the income statement. On the other hand, 'Salaries and wages' are an expense occurred by the company as part of administrative costs, thus, they do feature on the income statement.