The Two Types of Allowances That May Be Considered Before

question 83

Multiple Choice

The two types of allowances that may be considered before the division of profits and losses are:

• A) interest and salary allowances.
• B) interest and bonus allowances.
• C) salary and bonus allowances.
• D) bonus and liquidation allowances.

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Definitions:

Single-Step Income Statement

A form of income statement in which the total of all expenses is deducted from the total of all revenues.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting overhead, payroll, taxes, and interest.

Income from Operations

The earnings generated from a business's core activities, excluding revenues and expenses from non-operational activities.

Perpetual Inventory System

An accounting method that continuously updates inventory records for each purchase and sale of inventory.