Chapter 1 — Foundations & The Accounting Equation

Income Filter

Learning Outcome Covered: 1.4d

Clean the Income Statement

✅ Revenue
✅ Expense
❌ Asset

🎯 Objective

Identify and remove accounts that do NOT belong on the Income Statement. Only Revenue and Expense accounts should remain!

🎮 How to Play

  1. See a list of accounts
  2. Tap accounts that do NOT belong on the Income Statement
  3. Remove all wrong items (Assets, Liabilities, Equity)
  4. Submit when only Revenues and Expenses remain
⭐ How stars work: more stars = a better result. 3 stars = no mistakes at all.

📚 Learning: What Goes on the Income Statement?

📘 What You Will Learn

The Income Statement shows if a company made money or lost money. But not ALL accounts go on this statement!

💡 The Simple Rule

✅ Belongs on Income Statement ❌ Does NOT Belong
Revenue accounts Asset accounts
Expense accounts Liability accounts
Equity accounts

✅ What Belongs

  • Service Revenue
  • Sales Revenue
  • Rent Expense
  • Salaries Expense
  • All other Expense accounts

⚠️ Common Traps (Do NOT Include)

  • Cash - This is an Asset (Balance Sheet)
  • Accounts Receivable - This is an Asset (Balance Sheet)
  • Dividends - Money paid out to the owners. This is Equity, not an Expense!
  • Unearned Revenue - The customer paid early and you still owe them the work. This is a Liability, not Revenue!
  • Prepaid Insurance and Prepaid Rent - Assets, paid ahead.

💡 The Income Statement Formula

Revenues - Expenses = Net Income (or Net Loss)

🧠 Remember

Income Statement = Revenues and Expenses ONLY!

🔤 Quick Classification: ALOE & RED

ALOE → Assets, Liabilities, Owner's equity (Equity) → these belong on the Balance Sheet.

RED → Revenues, Expenses, Dividends/Drawings → Revenues and Expenses go on the Income Statement; Dividends/Drawings reduce equity.

If you see an ALOE account in this game, remove it — it doesn't belong on the Income Statement.

Round
1/10
Score
0
🔥 0
Tap and remove items that do NOT belong on the Income Statement.
Income Statement

🏆 Game Complete!

0%
☆ ☆ ☆

Correct Rounds: 0

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