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Exam 7: The Income Statement: Content and Use

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Question 31

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_______________ _____need accounting information that lets them compare a business' actual operating performance over several years or with that of other businesses.

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Question 32

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Revenues come from sales of goods and services to customers and result in:

A) increased assets or decreased liabilities.
B) decreased assets or increased liabilities.
C) decreases in both assets and liabilities.
D) increases in both assets and liabilities.

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Question 33

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What are the differences between sales returns and sales allowances?

Expenses result in increases in assets or decreases in liabilities.

The income statement plays a key role in the decision making of users of financial information by communicating the business' revenue, expenses and net income.

A cash account is referred to as a permanent account because it is:

Describe a perpetual inventory system.

What are closing entries and what is their purpose?

Gross profit is the gross sales price charged for the goods sold.

Which of the following is a subheading under the operating expenses of an income statement?

Asset, liability, and owner's equity accounts are:

The income statement summarises the results of a business' operating activities for a ____________________ accounting period.

Closing entries are made by the business at the end of an accounting period to:

A periodic inventory system requires a physical count of inventory at the end of each accounting period.

Example 7.1 The information below is used for the following problems. Jones Sales Company had: $\begin{array}{lr}\text { Net Sales } & 200000 \\\text { Gross Profit } & 90000 \\\text { Operating Profit } & 50000 \\\text { Net Income } & 35000\end{array}$ -Refer to Example 7.1. Jones Sales Company's gross profit percentage is:

Expenses are the cost of providing goods and services and result in:

Investors use the income statement to help judge their return on ____________________.

The ________________________ relates a business' gross profit to its net sales.

Explain the difference between an income statement and a statement of comprehensive income and provide some examples of items of other comprehensive income.

Revenues result in decreases in assets or increases in liabilities.