Below Is a Comparative Income Statement for Samson Company: Sams

question 145

Multiple Choice

Below is a comparative income statement for Samson Company: Sams on Comp any Income Statement
For the Y ears Ended D ecember 31, 20X6 and 20X5
$\begin{array}{lll}&20X6& 20X5\\\text { Sales } & \$ 1,744 & \$ 1,562 \\\text { Less: Cost of goods sold } & 992 & 806 \\\text { Gross profit } & \$ 752 & \$ 756 \\\text { Less operating expenses: } & &\\\text { W age expens e } & \$ 172 & \$ 160 \\\text { Depreciation expense } & 28 & 26 \\\text { Rent expense } & 36 & 36 \\\text { Miscellaneous expens e } & 40 & \underline{40}\\\text { Total operating expenses } & \$ 276 & \$ 292 \\\text { Operating income } & \$ 476 & \$ 464\\\text { Less other expenses: }\\\text { Interest } & \underline{20} & \underline{60} \\\text { Income before tax } & \$ 456 & \$ 404 \\\text { Less: Income tax expense } & \underline{182} & \underline{162} \\\text { Net income } & \$ 274 & \$ 242\\\text { Sales } & \$ \$ 1,744 & \$ 1,562 \\\text { Less: Cost of goods sold } & 992 & \$ 06 \\\text { Gross profit } & \$ 752 & \$ 756\end{array}$ If a common=size income statement were prepared, would be attributable to the 20X6 income tax expense of Samson Company.

• A) 11.0%
• B) 12.4%
• C) 39.9%
• D) 10.4%

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Definitions:

Short-Term Memory

The capacity for holding a small amount of information in an active, readily available state for a short period of time.

Magic Number

A term often used to refer to the number 7±2, which psychology suggests is the span of working memory, or the maximum number of items an individual can maintain in cognizant thought at once.

Chunking

A memory technique that organizes information into manageable units or chunks, making it easier to remember.

Miller

Refers to George A. Miller, a notable psychologist best known for his theory on the limitations of short-term memory capacity, famously summarized as "the magical number seven, plus or minus two."