Which of the Following Statements About an Income Statement Is

question 23

Multiple Choice

Which of the following statements about an income statement is true?

• A) An income statement provides information on an organisation's profitability at a certain point in time.
• B) An income statement deducts liabilities from assets to determine shareholders' equity.
• C) The expenses relate to cash payments.
• D) For revenue to be included,it is not necessary for cash to have been received.

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Definitions:

Contribution Margin

The difference between a company's sales revenue and its variable costs, used to cover fixed costs and generate profit.

Variable Cost

A corporate expense that changes in proportion with production output, such as raw materials and labor costs, differing from fixed costs.

Operating Cash Flow

The cash generated from the normal operations of a business, excluding financing and investing activities.

Variable Costs

Charges that adjust in direct proportion to the amount of goods produced or sold.