Which of the Following Statements Regarding the Income Statements of Corporations

question 89

Multiple Choice

Which of the following statements regarding the income statements of corporations is not correct?

• A)Some corporations include cost of goods sold with the operating expenses.
• B)Some corporations show income tax expense as an operating expense rather than as a deduction from net income before income tax.
• C)If a gain or loss results from a transaction that is highly unusual, is clearly unrelated to routine operations, and is not expected to occur again in the near future, the gain or loss is shown as an operating expense.
• D)Corporations can use a variety of formats for the income statement.

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Definitions:

Cash Flow Reporting

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Interest Paid

The amount paid over a period for the use of borrowed funds, typically expressed as an annual percentage of the loan amount.

Dividend

A portion of a company's earnings distributed to its shareholders as determined by the company's board of directors.

Operating Activities

The primary revenue-generating activities of a business, such as sales and service delivery, reflected in its cash flow.