The Computation of Cost of Goods Sold and Operating Expenses

question 8

Multiple Choice

The computation of cost of goods sold and operating expenses is based on all of the following except

• A) the cost of goods sold.
• B) general and administrative expenses.
• C) the firm's interest expense.
• D) depreciation expenses.

---

Definitions:

Annual Review

A comprehensive evaluation or analysis of a company's activities and financial performance over a one-year period.

Net Income

The income a business retains after subtracting all costs and taxes from its gross revenue.

Equity Method

An accounting technique used by companies to record their investments in other companies, reflecting the financial performance proportionally in their own accounts.

Buildings Account

An account that records the costs associated with a company's buildings, including purchase price, construction costs, and improvements.