On a cash basis income statement, which item is included?

• A. Revenues earned but not yet received
• B. Expenses paid during the period
• C. Revenues received and deposited
• D. Depreciation expense

Answer: (C)

In a cash-basis income statement, you record revenues only when cash actually comes in and expenses only when cash goes out. That means the item that would appear as revenue is the one that reflects real cash inflow. Revenues that have been received and deposited fit this, because they represent actual cash received during the period.

Revenues earned but not yet received would be excluded on a cash-basis statement since no cash has arrived yet. Depreciation expense is a noncash expenditure and doesn’t show up on a cash-basis statement. Expenses paid during the period do appear, but they are cash outflows (expenses), not revenues, so they don’t illustrate the revenue side of the cash-basis equation.