When Preparing the Financial Statements for a Company

question 73

Multiple Choice

When preparing the financial statements for a company:

• A)the report format of the income statement lists liabilities before assets.
• B)the account format for the balance sheet lists the assets on the left and liabilities and stockholders' equity on the right.
• C)the multiple-step balance sheet lists assets in order of their liquidity.
• D)the single-step income statement reports a number of subtotals.

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Definitions:

Selling Price Per Unit

The amount at which a single unit of product is offered for sale to customers.

Contribution Margin

The amount by which a product's sales exceed its variable costs; used to cover fixed costs and contribute to profit.

Variable Cost

Costs that vary in direct proportion to changes in levels of activity or volume of goods produced, such as materials and labor.

Selling Price

The amount charged to customers for a product or service, determining the revenue earned by a business.