Use This Information to Answer the Following Question If the Income Statement Were Prepared in a Multistep Form,excess

question 4

Multiple Choice

Use this information to answer the following question. $\begin{array}{c}\text { Alcorn \& Zeto Company}\\\text { Income Statement}\\\text { For the Year Ended December 31, 2010}\\\begin{array}{lrr}\text { Revenues } & \\\text { Net sales } & \$ 100,000 \\\text { Dividend income } & 7,000 \\\text { revenues } &&\$107,000\\\text { Costs and expenses } & \\\text { Costs of goods sold } & \$ 30,000 \\\text { Selling expenses } & 10,000 \\\text { General and administrative expenses } & 13,750 \\\text { Interest expense } & \underline{ 6,250} \\\text { Total costs and expenses } && \underline{60,000} \\\text { before income taxes } && \$ 47,000 \\\text { Income taxes } && \underline{ 19,500} \\\text { Net income } && \underline{ \$ 27,500}\end{array}\end{array}$ If the income statement were prepared in a multistep form,excess of other expenses over other revenues would be

• A) $7,000.
• B) $750.
• C) $13,250.
• D) $6,250.

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Definitions:

Shift Right

In economic terms, a shift to the right of a demand or supply curve represents an increase in demand or supply.

Remaining Firms

The number of businesses that continue to operate in a market after others have exited, often in response to economic conditions or competitive pressures.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

Long-Run Equilibrium

A state in a market where all firms are making zero economic profit, input factors are fully adjustable, and no firm has an incentive to enter or exit the market.