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Learning Objective 5-5

1) Cost of goods sold appears on a multi-step income statement but not on a single-step income statement.

2) The net income calculated using both the single and multi-step formats of income statement is always the same.

3) Operating income is gross profit minus operating expenses.

4) A single-step income statement shows subtotals for gross profit and operating income.

5) In a multi-step income statement, interest revenue and interest expense are included in operating income.

6) On a multi-step income statement, both merchandisers and service companies report operating expenses in two categories—selling expenses and administrative expenses.

7) A merchandiser's statement of owner's equity looks exactly like that of a service business.

8) The following information relates to Nebula Inc.

Sales Revenue

$230,000

Cost of Goods Sold

150,000

Interest Revenue

10,000

Operating Expenses

42,500

Sales Discounts

20,000

Sales Returns and Allowances

5,000

Calculate the operating income.

A) $12,500

B) $67,500

C) $230,000

D) $35,000

9) The following information relates to Nebula Inc.

Sales Revenue

$230,000

Cost of Goods Sold

150,000

Interest Revenue

10,000

Operating Expenses

42,500

Sales Discounts

20,000

Sales Returns and Allowances

5,000

Calculate the net income of Nebula.

A) $12,500

B) $22,500

C) $67,500

D) $230,000

10) On a multi-step income statement, which of the following is subtracted from net sales revenue to arrive at gross profit?

A) cost of goods available for sale

B) cost of goods sold

C) sales discounts and Sales returns and allowances

D) operating expenses

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Accounting 5 Months Ago 5 Views
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