The Principal Difference Between a Merchandising and a Manufacturing Income

question 87

Multiple Choice

The principal difference between a merchandising and a manufacturing income statement is the

• A) cost of goods sold section.
• B) extraordinary item section.
• C) operating expense section.
• D) revenue section.

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Definitions:

Retained Earnings

The portion of a company's profits not distributed to shareholders as dividends but kept within the company to reinvest in business operations or pay down debt.

Average Tax Rate

The total amount of tax paid divided by taxable income.

Taxes

Mandatory financial charges or levies imposed by a government on individuals, entities, or transactions to fund public expenditure.

Taxpayer

An individual or entity obligated to pay taxes to a federal, state, or local government body.