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

question 74

Multiple Choice

Use this information to answer the following question. $\begin{array}{c} \text {Alcorn \& Zeto Company}\\ \text { Income Statement}\\\text {For the Year Ended December 31, 2010}\\\begin{array}{llr} \text { Revenues} &\\ \text {Net sales } &\$103,250\\ \text {Dividend income }& 8,750\\ \text { Total revenues } &&\$112,000\\\text { Costs and expenses } & \\\text { Costs of goods sold } & \$ 30,000\\\text { Selling expenses } & 10,000 \\\text { General and administrative expenses } & 13,750 \\\text { Interest expense } & 6,250 \\ \text { Total costs and expenses } && 60,0000 \\\text { Income before income taxes } && \$ 52,000 \\\text { Income taxes } && 19,500 \\\text { Net income } && \$ 32,500 \\\end{array}\end{array}$
If the income statement were prepared in a multistep form,income from operations would be

• A) $49,500.
• B) $42,000.
• C) $52,000.
• D) $43,250.

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Definitions:

Operating Activities

The day-to-day actions that are involved in running a business and generating revenue, including production, sales, and service delivery.

Existing Capacity

The current maximum output or production level that a facility or factory can achieve using its available resources.

Accounts Payable

Short-term liabilities representing money owed by a company to its creditors for goods and services that have been purchased on credit.

Inventory Balance

The value of all the goods available for sale or use by a business at the end of an accounting period.