Which of the Following Statements About the Income Statement of a Company

question 35

Multiple Choice

Which of the following statements about the income statement of a company that was formed 10 years ago is correct?

• A)Reports a Net Loss for the year if expenses are more than revenues.
• B)Reports the financial effects of activities that have occurred since the company's inception.
• C)Reports the amount of the increase in stockholders' equity this year as a result of the company's operations.
• D)Reports Net Income,which is an account in the ledger.

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Definitions:

Revenue Recognition

The process of recording and identifying revenue in the financial statements when it is earned and realizable.

Percentage-of-Completion

An accounting method used to recognize revenue and expenses of long-term projects proportionally to the project's completion level.

Revenue Recognition

The accounting principle that dictates the conditions under which revenue is recognized or recorded, primarily focusing on the timing and amount.

Percentage-of-Completion

An accounting method recognizing revenues and expenses of long-term contracts as a percentage of work completed.