How are accounts receivable treated in the context of the income statement?

In the context of the income statement, accounts receivable are treated as part of the revenue process. When a company makes a sale on credit, it recognizes the revenue at that point even though it has not yet received cash. This is in accordance with the accrual basis of accounting, which dictates that revenue should be recognized when it is earned, not necessarily when cash is received.

In this scenario, accounts receivable represent amounts that customers owe the company for goods or services that have already been delivered. While accounts receivable themselves do not appear directly on the income statement, they play a crucial role in recognizing revenue, as they reflect sales that have been made but not yet collected in cash. Thus, they are accounted for indirectly through the revenue recognized, which is why the answer indicates that they are included in revenue indirectly.

The other options do not accurately reflect the role of accounts receivable. They do not appear as a separate line item on the income statement, nor are they considered a liability on the balance sheet, and they are indeed relevant to revenue recognition. This understanding is fundamental in interpreting financial statements and analyzing a company's revenue streams accurately.