#23 Income Statement

Question 1

Describe how a multi-step income statement is organized

Answer 1

Sales
 -COGS
= Gross Profit
 - Operating Expenses
= Operating Income
\+ Misc Revenues/Gains
 - Misc Expenses/Losses
= Income before Tax
 - Income Tax Expense
= Income from continuing operations
\+/- Income from discontinued operations
= Net Income

Question 2

Selling expenses, General and Administrative expenses, and Depreciation are all considered what kind of expense?

Answer 2

Operating expenses

Question 3

Is Advertising considered a selling expense or a general and administrative expense?

Answer 3

Selling expense

Question 4

Are gains from discontinued operations considered a part of total revenues?

Answer 4

No

Question 5

Where do gains on available for sale securities show up on the income statement?

Answer 5

They aren’t listed on the income statement. They are a part of other comprehensive income.

Question 6

Is Insurance expense reported as a general and administrative expense?

Answer 6

Yes

Question 7

Are sales representatives’ salaries reported as a general and administrative expense?

Answer 7

No