Which item is listed first on the income statement?

• A. Revenues
• B. Expenses
• C. Net income
• D. Cost of sales

Answer: (A)

The first line on an income statement is revenues because this represents the earnings from selling goods or services during the period and sets the starting point for calculating profit. Everything else on the statement flows from that top line: expenses (including the cost of sales) are subtracted to arrive at net income, the bottom line. Cost of sales is a specific expense tied to producing goods sold, so it appears after revenues as part of the expenses, not as the starting figure. Net income appears last, showing what remains after all revenues and expenses have been accounted for. Hence, revenues is the line you see first.