Question 2


Where are you likely to find the revenue from sales over the last three months?

(a) On the Cash Flow Statement under Finance
(b) On the Balance Sheet as a Current Asset
(c) Income Statement as Net Income
(d) None of the above


The Finance section of the Cash Flow Statement shows a company's inflow of cash, but from borrowing and lending and changes in ownership, so you would not find sales revenue here.

The Balance Sheet is a snapshot, showing what is owned and who owns it (i.e. assets and liabilities). Therefore, you will not find any information pertaining to sales revenue on the Balance Sheet.

The Income Statement is the correct document for sales revenue, but not as Net Income. Remember, Net Income is the company's "bottom line" — the profit. The "top line" of the Income Statement is where you would find the sales revenue. However, this is not one of our choices in the question, so the correct answer is: (d) None of the above.

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