Which of the Following Accounts Would Appear on the Sales

question 87

Multiple Choice

Which of the following accounts would appear on the sales budget and the pro forma income statement?

• A) Selling and administrative expenses
• B) Sales revenue
• C) Accounts receivable
• D) Both B and C are correct

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, reflected as a financial charge in the income statement over the period of borrowing.

Interest Revenue

Income earned on investments like savings accounts, certificates of deposit, and bonds, typically presented within non-operating income on the income statement.

Current Ratio

A measure of liquidity calculated by dividing a company's current assets by its current liabilities, indicating how well it can cover its short-term obligations.

Capital Lease

A lease agreement that transfers substantially all the risks and rewards of ownership of the asset to the lessee, and is recorded as an asset and liability on the balance sheet.