Accounting Concepts Quiz

The income statement shows the results of operations as well as the financial standing of a company as of a given date.

• True

• False

In preparing the income statement of a company, management may choose between the single-step income statement or the multiple-step income statement based on convenience.

• True

• False

The cost of sales method of preparing income statement presents expenses according to nature.

• True

• False

The single-step income statement is used only in a service type of business.

• True

• False

The single-step income statement presents expenses according to function.

• True

• False

expenses directly related to the sale of merchandise

• Cost of Goods Sold

• General Expenses

• Distribution/Selling Expenses

• Finance Cost

represents the cost of merchandise inventory sold by the business to its customers

• Cost of Sales

• Net Sales

• Gross Sales

• Other Sales

the main source of revenue in a merchandising business

• Sales Revenue
• Other Income

• Service Revenue

• Sales Talk Revenue

type of income statement that presents expenses according to nature

• Income Method

• Revenue Method

• Sales Method

• Nature of Expense Method

expenses necessary in the management of the office

• Distribution Expense

• General Expenses

• Other Expenses

• Utilities Expense