The Purpose of Developing the Subtotal "Income from Continuing Operations

question 127

Multiple Choice

The purpose of developing the subtotal "Income from Continuing Operations" in an income statement is to:

• A)Assist investors in forecasting future operating results.
• B)Increase the amount of reported net income.
• C)Decrease the amount of income subject to income taxes.
• D)Provide investors with the information necessary to compute earnings per share.

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Definitions:

Credit Sales

Sales made on credit, where the payment from the customer is received at a later date.

Accounts Receivable

Money owed to a business by its clients for goods or services delivered but not yet paid for.

Merchandise

Goods that are bought, sold, and traded within a retail or wholesale business environment.

Accounts Receivable

Represents money owed to a business by its customers for goods or services delivered but not yet paid for, usually recoverable within a short period, like 30, 60, or 90 days.