Which of the Basic Financial Statements Is Best Used to Answer

question 28

Multiple Choice

Which of the basic financial statements is best used to answer the question, "How profitable is the business?"

• A) Balance sheet
• B) Statement of shareholder's equity
• C) Income statement
• D) Accounts receivable aging schedule

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Definitions:

Kilowatt-hour

A unit of energy measurement equivalent to one kilowatt of power expended for one hour of time, commonly used for billing electricity usage.

Straight-line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, representing the asset’s decrease in value over time.

Factory Equipment

Fixed assets used in manufacturing processes, such as machinery and tools, necessary for producing goods.

Variable Cost

Outlays that are tied to the level of output or sales, including expenditures on materials and labor.