Which is an income statement line item?

Which is an income statement line item?

• A. Inventory
• B. Sales
• C. PPE
• D. Cash

Answer: (B)

An income statement shows a company’s performance over a period, listing revenues and expenses to arrive at net income. Revenue, often labeled as Sales, is the primary line item on that statement because it represents the money earned from delivering goods or services during the period. The other items—Inventory, PPE (property, plant, and equipment), and Cash—are balance sheet items (assets). Inventory is a current asset that becomes part of cost of goods sold on the income statement when sold, PPE is a long-term asset, and Cash is a liquid asset. So Sales stands out as the income statement line item.

An income statement shows a company’s performance over a period, listing revenues and expenses to arrive at net income. Revenue, often labeled as Sales, is the primary line item on that statement because it represents the money earned from delivering goods or services during the period. The other items—Inventory, PPE (property, plant, and equipment), and Cash—are balance sheet items (assets). Inventory is a current asset that becomes part of cost of goods sold on the income statement when sold, PPE is a long-term asset, and Cash is a liquid asset. So Sales stands out as the income statement line item.