Which of the Following Combinations Results Does Not Result in the Same

question 298

Multiple Choice

Which of the following combinations results does not result in the same amount of net income reported on the income statement?

• A) Total revenues of $70,000 and total expenses of $60,000.
• B) Total revenues of $40,000 and total expenses of $20,000.
• C) Total revenues of $80,000 and total expenses of $60,000.
• D) Total revenues of $60,000 and total expenses of $40,000.
• E) Total revenues of $170,000 and total expenses of $150,000.

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Definitions:

Operating Activities

Activities that relate directly to the operation of the business, including production, sales, and other functions that generate revenue and expenses.

Investments

Investments are assets or items acquired with the goal of generating income or appreciation, including stocks, bonds, real estate, or other vehicles of value.

Direct Method

A cash flow statement preparation method that discloses major classes of gross cash receipts and payments, as opposed to the indirect method which adjusts net income for non-cash transactions.

Operating Expenses

Operating expenses are the costs associated with running a business's core operations on a daily basis, excluding the cost of goods sold, such as rent, utilities, and payroll.