Chartered Financial Analyst (CFA) Practice Exam Level 2

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Prepare for the CFA Exam Level 2 with comprehensive quizzes and resources. Test your knowledge with challenging questions that reflect the exam format and content. Build confidence and achieve your career goals in finance!

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Which of the following items is NOT found on the Income Statement?

Cash
COGS
Depreciation
Interest Expense

The correct answer is: Cash

The income statement reflects a company's financial performance over a specific period, showcasing revenues and expenses to arrive at net income. Items typically included on the income statement are revenues, cost of goods sold (COGS), various operating expenses, interest expense, and taxes. Cash, on the other hand, represents a balance sheet item that indicates the availability of liquid assets at a particular point in time. The income statement does not report cash balances or cash flows; rather, it focuses only on revenues and expenses that impact net income during the reporting period. Therefore, since cash is not an expense or revenue component, it does not appear on the income statement. This characteristic differentiates it from COGS, depreciation, and interest expense, all of which are essential components of calculating a company's profitability.