Question
Which of the following should appear in the income statement? Salaries and wages Property, plant and equipment Motor vehicles Trade receivables Bank loan
Answer
4.7
(231 Votes)
Evan
Expert · Tutor for 3 years
Answer
Salaries and wages(Salaries and wages is the item that should typically appear in the income statement.)
Explanation
## Step1: To solve this problem, we need to understand that the income statement is one of the major financial statements of a company that reveals the company's profit or loss over a specific time period which includes revenue, cost of goods sold (COGS), gross profits, and expenses. Therefore, we should identify which item from the given options normally appears within this structure. ## Step2: The option "Salaries and wages" is typically part of the operating expenses listed in an income statement since it covers what a company pays to its workforce over a specific period covered by the income statement. These expenses directly relate to the day-to-day activities of the company in earning revenues.## Step3: "Property, plant and equipment," "Motor vehicles," and "Trade receivables" are all types of assets, so they typically appear on a company's balance sheet, not in the income statement. ## Step4: "Bank loan" is a liability and, hence, generally appears on a company's balance sheet, not the income statement. ### Formulas/measures applied in this problem: The basic formula often used for an income statement is: ### **Revenues - Expenses = Net Income**