Which of the Following Statements Best Describes the Income Statement

question 33

Multiple Choice

Which of the following statements best describes the income statement?

• A) The focal point of the income statement is the cash account, because that account cannot be manipulated by "accounting tricks."
• B) EBITDA is a truer measure of financial strength than are net income and free cash flow.
• C) If a firm follows the International Financial Reporting Standard (IFRS), its reported net income and net cash flow will be the same.
• D) The income statement for a given year is designed to give us an idea of how much the firm earned during that year.

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Definitions:

Expense

Money spent or cost incurred in an organization's efforts to generate revenue, representing the cost of doing business.

Check

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer.

Accounts Payable

The amount of money owed by a company to its creditors for goods and services received but not yet paid for.

Credit Sale

A type of transaction where the goods or services are provided to the customer with the agreement that payment will be made at a later date.