Meg Malloy Is Running an Income Statement on Her QuickBooks

question 351

Multiple Choice

Meg Malloy is running an income statement on her QuickBooks computer accounting program. Which of the following accounts will be used to calculate gross profit?

• A) Revenues, net sales, depreciation, and operating expenses
• B) Revenues, general expenses
• C) Revenues, cost of goods sold, tax expenses, net income before taxes
• D) Revenues, cost of goods sold

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Definitions:

Asset Revaluation Reserve

An equity account that records increases in the carrying amount of a company's assets, reflecting changes in value over time.

General Reserve

A reserve fund set aside out of profits for the purpose of strengthening the company's financial position and fulfilling future needs or contingencies.

Acquisition Excess

The amount by which the purchase price of an acquired asset or business exceeds its fair value, often recognized as goodwill.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is recorded at cost and adjusted for the investor's share of the investee's profit or loss.