A Multistep Income Statement Reports Different Types of Income That

question 126

Multiple Choice

A multistep income statement reports different types of income that include:

• A)sales revenue and service revenue.
• B)income tax expense, utilities expense, rent expense.
• C)operating income, income before income taxes, and net income.
• D)cost of goods sold and operating expenses.

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Definitions:

Average Collection Period

A financial metric used to evaluate the average number of days a company takes to collect payments from its credit sales.

Acid-test Ratio

A stringent indicator of a company's liquidity, calculated by dividing liquid assets by current liabilities, to determine if it can meet short-term obligations.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.

Inventory Turnover

A ratio showing how many times a company sells and replaces its stock of goods within a certain period.