Which of the following statements related to multiple-step Statement of Profit or Loss is not true? O The first section of the statement reports gross profit. O Subtotals for total selling expenses and general and administrative expenses are reported. O Non-operating items are reported separately from operations. O Shows only one total for expenses.

Which of the following statements related to multiple-step Statement of Profit or Loss is not true? O The first section of the statement reports gross profit. O Subtotals for total selling expenses and general and administrative expenses are reported. O Non-operating items are reported separately from operations. O Shows only one total for expenses.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter2: Financial Statements And The Annual Report

Section: Chapter Questions

Problem 2.13MCE

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What is the term used for the profit on a sale before any operating expenses have been deducted? a. Net Income b. Net Profit c. Gross Profit d. Gain on Sale e. All of the above
Identify each of the following items relating to sections of an income statement as Revenue from Sales (S), Cost of Goods Sold (CGS), Selling Expenses (SE), General Expenses (GE), Other Income (OI), or Other Expenses (OE). a. Utilities Expense b. Advertising Expense c. Purchases Discounts d. Sales Returns and Allowances e. Interest Income f. Freight In g. Depreciation Expense, Equipment h. Interest Expense i. Rent Expense j. Sales
Which of the following statements related to the multiple-step income statement is false? Subtotals for total selling expenses and general and administrative expenses are reported. Interest revenue is included with other revenue and gains. The first section of the statement reports gross profit. Only one total for all expenses is shown. Non-operating items are reported separately from operations.
In order to create a common size statement for the Statement of Profit and Loss, all items must: a. Divided by net earnings b. None of the above c. Multiply by net earnings d. Multiply by sales e. Divided by sales
Gross profit and income from operations are reported on a multiple-step but not a single-step income statement. * True False
Which of the following statement is False for a Simple-Step Income Statement? a. Net Profit can be calculated b. Cost of goods sold will be taken under total revenue c. Selling expenses will be calculated under total expenses d. General and Administration expenses will be taken under total expenses
Which of the following statement is False for a Simple-Step Income Statement? a. Total expenses cannot be calculated b. Net Sales can be calculated c. Net Profit can be calculated d. Cost of goods sold will be taken under total expenses
Which is incorrect concerning the presentation of Income Statement? A. When items of income and expense are material, their nature and amount shall be disclosed separately. B. An entity shall present extraordinary items separately on the face of the income statement or in the notes to F/S. C. Natural presentation means that expenses are aggregated according to their nature like depreciation and employee benefits. D. Cost of sales method classifies expenses according to their function such as cost of sales, cost of distribution and cost of administrative activities. E. Both the natural presentation and functional presentation has their own merits for different types of entities, so the standard allows management to choose which they think is more relevant and reliable presentation.
Which of the following best describes a single-step income statement? a.Operating expenses are divided into the subcategories of selling expenses and general expenses. b.Gross sales is shown first, less sales returns and allowances and sales discounts. c.Operating expenses are listed and subtracted from the gross profit to compute income from operations. d.All revenue items and their total are listed first, followed by all expense items and their total.
Which statement is incorrect? *A.the FUNCTIONAL Income Statement classifies expenses into cost of sales, selling expenses and general administrative expenses, among others .b.Income encompasses both revenues and gains. Revenues arise in the ordinary course of business activities while gains are not. c.Expenses encompasses both expenses and losses. Losses usually comprise the majority amount of deductible expenses to arrive at taxable income. d.The statement of comprehensive income encompasses all income and expenses, whether they are recognized in profit or loss determination or recognized directly in equity. e.none of the above
In a multiple-step income statement, interest expense usually is not classified as an operating expense because interest charges: a do not contribute to the production of revenue. b Relate directly to the cost of goods sold. c Stem from the manner in which assets are financed, not the manner in which they are used in business operations. d The statement is incorrect. Interest usually is classified as an operating expense.
Multiple-step income statements: a. Show both gross profit and income from operations b. Show neither gross profit nor income from operations c. Show income from operations but not gross profit d. Show gross profit but not income from operations