Which of the Following Is the Primary Objective of an Income

question 113

Multiple Choice

Which of the following is the primary objective of an income statement?

• A)Providing managers with detailed information about where the enterprise stands at a specific date.
• B)Providing users outside the business organization with information about the company's operating results for a period of time.
• C)Reporting to the Internal Revenue Service the company's taxable income.
• D)Indicating to investors in a particular company the current market values of their investments.

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Definitions:

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equity) in a balance sheet is represented as a proportion of the total account.

Inventory Turnover

A measure of the liquidity of inventory; computed by dividing cost of goods sold by average inventory.

Liquidity

The ability of an asset to be quickly converted into cash or the ability of a company to meet its short-term financial obligations.

Federal Government

The national government of a federated state, which holds the authority to govern at a national level, possessing powers typically outlined in a constitution.