Which of the Following Income Statement Figures Would Probably Be

question 155

Multiple Choice

Which of the following income statement figures would probably be the best indicator of a company's future performance?

• A) Total revenues
• B) Income from operations
• C) Net income
• D) Gross profit

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Definitions:

Allowance for Doubtful Accounts

A contra asset account that represents the estimated portion of accounts receivable that may not be collectible.

Allowance Method

An accounting technique used to estimate and account for doubtful accounts receivable and adjust the amount of accounts receivable reported on the balance sheet.

Accounts Receivable

Money owed to a company by its customers for sales or services on credit, considered a current asset on the balance sheet.

Allowance for Doubtful Accounts

A contra-asset account used to estimate and offset the amount of receivables that may not be collected.