The Income Statement Is Prepared by Using the Revenue and Expense

question 103

Multiple Choice

The income statement is prepared by using the revenue and expense account balances from the

• A)trial balance.
• B)ledgers.
• C)adjusted trial balance.
• D)journal.

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Definitions:

Contra-Asset

A contra-asset account is an asset account where the balance of the account will either be a zero or a negative figure, which offsets the balance of the related asset account.

Doubtful Accounts

Receivable accounts that may potentially become bad debts as the likelihood of collection is uncertain.

Balance Sheet

The balance sheet is a financial statement that shows a company's financial position at a specific point in time, listing assets, liabilities, and shareholders' equity.

Allowance Method

Bases bad debt expense on an estimate of uncollectible accounts.