INTELLIPATH UNIT 1

Under accrual-basis accounting, revenues are recognized when cash is ____, and expenses are recognized which cash is _________

Earned; incurred

Operating income may be calculated as ______________

Gross margin minus operating expenses

The difference between the selling price of a product and the cost of the product is called __________

Gross profit

Separating operating revenues and expenses from other items allows users of financial statements to ____________

Identify activities that are ongoing as opposed to those that are not

The financial statement that shows the performance of the company by subtracting expenses and costs from revenues and gains for one accounting period is the _________

Income Statement

Which of the following accounts would not be included under operating expenses on the multistep income statement

Interest expense

Which of the following is true about the gross profit percentage

It is computed by subtracting the cost of goods sold from sales and dividing the result by sales

Which of the following is the preferred income statement presentation under the Generally Accepted Accounting Principles (GAAP)

Multistep

Which of the following items is listed first on an income statement

Revenue

Net income is ____________

The primary way of evaluating the financial performance for a business

A corporate income statement does not contain ____________

Unrealized investment gains and losses

Which of the following accounts would appear on the income statement

Utility Expense

On a multistep income statement, income from continuing operations __________

can equal, exceed, or be less than the net income

Interest expense, as reported on the income statement, _______

is a separate line item that is not included in expenses

Net income is defined as ________

revenues minus expenses