A Suitable Format for the Income Statement for a Medium-Sized

question 54

Multiple Choice

A suitable format for the income statement for a medium-sized furniture store operating as a partnership would be:

• A) sales - cost of sales = gross profit.
• B) income + expenses = profit.
• C) sales - cost of sales = gross profit - expenses = profit.
• D) income - expenses = profit.

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Definitions:

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in dividends, expressed as a percentage of the company's total earnings.

Residual Dividend Policy

A strategy where dividends paid to shareholders are based on earnings left after the firm has funded all its capital investments.

Dividend Per Share

Dividend per share (DPS) is the sum of declared dividends issued by a company for every ordinary share outstanding.

Net Income

Net income is the total earnings of a company after all expenses and taxes have been deducted from revenue.