In a Multiple-Step Income Statement,income Taxes Are Not Classified as Operating

question 109

Multiple Choice

In a multiple-step income statement,income taxes are not classified as operating expenses because:

• A)Income taxes do not contribute to the production of revenue.
• B)Income taxes stem from the manner in which assets are financed,not the manner in which they are used in business operations.
• C)Not all forms of business organization are subject to income taxes.
• D)The statement is incorrect;income taxes are classified as operating expenses.

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Definitions:

Opportunity Costs

A concept in economics that describes the potential benefits that an individual, investor, or business misses out on when choosing one alternative over another.

ATC

Average Total Cost is the sum of all production costs divided by the quantity of output produced.

Perfectly Competitive Firm

A theoretical business entity in a market where no single company can influence the price of goods or services, and where all products are identical.

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices.