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  • This Study Resource Was: Income Statement - Theories

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    venice cambry
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    The document discusses theories related to income statements. It provides 5 multiple choice questions: 1. For December, the company should report interest expense of $1,000 in the first quarter ending March 1, as this is the interest accrued for the first 3 months. 2. Operating income is defined as gross profit minus operating expenses. 3. Capital expenditures refer to amounts spent to acquire or improve long-term assets like equipment or buildings. 4. Unearned revenue refers to amounts received prior to being earned. 5. Separate line items in an analysis of expenses by function include items like depreciation, purchases, transport costs, employee benefits and advertising costs.

    Original Description:

    ACCO 20023

    Original Title

    Income_Statement_theo.docx

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    The document discusses theories related to income statements. It provides 5 multiple choice questions: 1. For December, the company should report interest expense of $1,000 in the first quarter ending March 1, as this is the interest accrued for the first 3 months. 2. Operating income is defined as gross profit minus operating expenses. 3. Capital expenditures refer to amounts spent to acquire or improve long-term assets like equipment or buildings. 4. Unearned revenue refers to amounts received prior to being earned. 5. Separate line items in an analysis of expenses by function include items like depreciation, purchases, transport costs, employee benefits and advertising costs.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    18 views1 page

    This Study Resource Was: Income Statement - Theories

    Uploaded by

    venice cambry
    The document discusses theories related to income statements. It provides 5 multiple choice questions: 1. For December, the company should report interest expense of $1,000 in the first quarter ending March 1, as this is the interest accrued for the first 3 months. 2. Operating income is defined as gross profit minus operating expenses. 3. Capital expenditures refer to amounts spent to acquire or improve long-term assets like equipment or buildings. 4. Unearned revenue refers to amounts received prior to being earned. 5. Separate line items in an analysis of expenses by function include items like depreciation, purchases, transport costs, employee benefits and advertising costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 1

    Income Statement – Theories

    1. On December 1 a company borrowed P100,000 at 12% per year. The interest will be paid
    quarterly, with the first payment due on March 1. What should the company report on its
    income statement for December?
    a. Interest Expense of P3000
    b. Interest Expense of P1000
    c. Interest Expense of P4000
    d. 0

    2. Gross Profit minus Operating Expenses is best defined as?


    a. Net Income

    m
    b. Net Sales

    er as
    c. Operating Income

    co
    eH w
    d. Gross Sales

    o.
    rs e
    3. What do you call an amount spent to acquire or significantly improve the capacity or capabilities of a
    ou urc
    long-term asset such as equipment or buildings.
    a. Revenue Expenditure
    b. Capital Expenditures
    o

    c. Gain Expenditures
    aC s

    d. Profit Expenditures
    vi y re
    ed d

    4. It refers to amounts received prior to being earned.


    ar stu

    a. Unearned Revenue
    b. Cash
    c. Capital
    is

    d. None of the above


    Th

    5. Separate line items in an analysis of expenses by function include:


    a. Depreciation, purchases, transport costs, employee benefits and advertising costs
    b. Cost of goods sold, administrative and distribution costs
    sh

    c. Purchases, transport costs, employee benefits, depreciation, extraordinary items


    d. Purchases, distribution costs, administrative costs, employee benefits, depreciation taxes

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