Net Income Appears on Which of the Following Financial Statements

question 59

Multiple Choice

Net income appears on which of the following financial statements?

• A)Balance sheet and income statement.
• B)Balance sheet and retained earnings statement.
• C)Balance sheet and cash flow statement.
• D)Income statement and retained earnings statement.

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Definitions:

Fixed Costs

Financial obligations like rent, wages, and insurance that are stable and do not vary with the level of goods manufactured or sold.

Break-even

The point at which total revenues equal total costs, resulting in neither profit nor loss for the business.

Margin of Safety

The difference between actual or projected sales and the break-even point. It indicates the amount of sales decline a business can endure before it starts incurring losses.

Variable Costs

Costs that change in proportion to the level of activity or production volume.