When Creating the Income Statement, Which of the Following Statements

question 282

Multiple Choice

When creating the income statement, which of the following statements is accurate?

• A) revenues, minus general operating expenses = gross profit.
• B) revenues, minus tax expense = gross profit.
• C) revenues, minus depreciation expense = gross profit.
• D) revenues, minus cost of goods sold = gross profit.

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Definitions:

Fair Market Value

The price at which an asset would change hands between a willing buyer and seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset, over its useful life, up to the current date.

Salvage Value

The estimated value that an asset will realize upon its sale at the end of its useful life, used in calculating depreciation.

Discarded

Discarded refers to items or substances that have been thrown away or disposed of, no longer deemed useful or necessary.