Which of the following is a balance sheet component?

Which of the following is a balance sheet component?

• A. Revenue
• B. Assets
• C. Net income
• D. Expenses

Answer: (B)

Assets are a balance sheet component because the balance sheet shows the company’s financial position at a specific date by listing resources the company owns, obligations it owes, and the owners’ claim to those resources. Revenue, expenses, and net income come from the income statement and describe performance over a period of time, not the snapshot of position at a date. Net income affects equity through retained earnings, but it isn’t shown as a separate balance sheet item. Therefore, the item that belongs on the balance sheet among these is assets, such as cash, accounts receivable, inventory, and property.

Assets are a balance sheet component because the balance sheet shows the company’s financial position at a specific date by listing resources the company owns, obligations it owes, and the owners’ claim to those resources. Revenue, expenses, and net income come from the income statement and describe performance over a period of time, not the snapshot of position at a date. Net income affects equity through retained earnings, but it isn’t shown as a separate balance sheet item. Therefore, the item that belongs on the balance sheet among these is assets, such as cash, accounts receivable, inventory, and property.