Which Is the Correct Order for Items to Appear on the Income

question 132

Multiple Choice

Which is the correct order for items to appear on the income statement?

• A) Revenues, income from operations, gross profit
• B) Income before income taxes, operating expenses, gross profit
• C) Revenues, net income, operating expenses
• D) Gross profit, income from operations, net income

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Definitions:

Income Statement Method

A technique used to create a company's income statement to report earnings and financial performance.

Income Statement Approach

A method that estimates the amount of Bad Debts Expense that will result based on a percentage of net credit sales for the period. The amount of the expected bad debt is added to the existing balance of Allowance for Doubtful Accounts.

Gross Accounts Receivable

The total amount owed to a company by its customers for goods or services delivered, before deducting any allowance for doubtful accounts.

Contra-Asset Account

An asset account where its balance is a reduction of another asset account, typically used for accumulated depreciation.