The Basic Formula Used for the Income Statement Is

question 103

Multiple Choice

The basic formula used for the income statement is

• A) profit plus revenues equals expenses.
• B) revenue minus expenses equals profit.
• C) expenses plus profit equals revenue.
• D) expenses plus revenues equals profit.
• E) revenue minus profits equals expenses.

Understand the changes in government spending and tax structure from 1960 to 2018.

Grasp the concept of deficit spending and its impact on national debt.

Analyze the composition of federal tax revenues and spending allocations.

Compare the different sources of state and local government revenues.

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Definitions:

Net Income

The amount of earnings left after all expenses, including taxes and costs, have been subtracted from total revenue.

Fixed Overhead

Fixed overhead consists of the consistent, ongoing costs not directly tied to production levels within a business, such as rent, insurance, and salaries.

Inventory

Items held by a company for sale in the ordinary course of business or to be used in producing goods and services for sale.

Absorption Costing

A methodology for product costing that comprehensively adds up the costs of direct materials, direct labor, and both fixed and variable manufacturing overheads.