College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Textbook Question
Chapter 15, Problem 1TF
LO1 A multiple-step form of income statement calculates gross profit, before subtracting operating expenses.
Expert Solution & Answer
To determine
Identify whether the given statement is true or false.
Answer to Problem 1TF
The given statement “A multiple-step form of income statement calculates gross profit, before Subtracting operating expenses” is true.
Explanation of Solution
Multi-step income statement:
Multi-step income statement provides step-by-step computation of net sales, cost of goods sold, operating expenses, gross profit, other revenues and expenses, income from operations and net income.
- In a multi-step income statement, Initially Gross sales are computed (less sales returns and allowances and sales discounts) and this difference is known as net sales.
- Cost of goods sold is subtracted from net sales to get gross profit or gross margin. Then, operating expenses are subtracted from the gross profit to calculate income from operations.
Therefore, from the above explanation, the given statement “A multiple-step form of income statement calculates gross profit, before Subtracting operating expenses” is true.
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Students have asked these similar questions
In a multiple-step income statement, operating expenses are subtracted from gross profit to compute
a.other income.
b.income from operations.
c.net loss.
d.net income.
Requirement : 2
Calculate the following from the additional information given
G
Gross profit
H
Net profit
The income statement line gross profit will appear on which income statement format? Select one: a. Receipt and payment account b. Multiple step income statement c. Single step income statement d. Income and expenditure account
Chapter 15 Solutions
College Accounting, Chapters 1-27
Ch. 15 - LO1 A multiple-step form of income statement...Ch. 15 - Prob. 2TFCh. 15 - Prob. 3TFCh. 15 - Prob. 4TFCh. 15 - LO4 Accounts receivable turnover is the number of...Ch. 15 - Prob. 1MCCh. 15 - Prob. 2MCCh. 15 - Prob. 3MCCh. 15 - Prob. 4MCCh. 15 - Prob. 5MC
Ch. 15 - Prob. 1CECh. 15 - Prob. 2CECh. 15 - Prob. 3CECh. 15 - Prob. 4CECh. 15 - Prob. 5CECh. 15 - Prob. 6CECh. 15 - Prob. 1RQCh. 15 - Prob. 2RQCh. 15 - Describe how to calculate the following ratios (a)...Ch. 15 - Where is the information obtained that is needed...Ch. 15 - Explain the function of each of the four closing...Ch. 15 - What is the purpose of a post-closing trial...Ch. 15 - What is the primary purpose of reversing entries?Ch. 15 - What is the customary date for reversing entries?Ch. 15 - What adjusting entries should be reversed?Ch. 15 - REVENUE SECTION. MULTIPLE-STEP INCOME STATEMENT...Ch. 15 - COST OF GOODS SOLD SECTION, MULTIPLE-STEP INCOME...Ch. 15 - MULTIPLE-STEP INCOME STATEMENT Use the following...Ch. 15 - FINANCIAL RATIOS Based on the financial statements...Ch. 15 - CLOSING ENTRIES Using the spreadsheet and...Ch. 15 - REVERSING ENTRIES From the spreadsheet used in...Ch. 15 - ADJUSTING, CLOSING, AND REVERSING ENTRIES Prepare...Ch. 15 - INCOME STATEMENT, STATEMENT OF OWNERS EQUITY, AND...Ch. 15 - FINANCIAL RATIOS Use the spreadsheet and financial...Ch. 15 - END-OF-PERIOD SPREADSHEET, ADJUSTING, CLOSING, AND...Ch. 15 - REVENUE SECTION, MULTIPLE-STEP INCOME STATEMENT...Ch. 15 - COST OF GOODS SOLD SECTION, MULTIPLE-STEP INCOME...Ch. 15 - MULTIPLE-STEP INCOME STATEMENT Use the following...Ch. 15 - FINANCIAL RATIOS Based on the financial...Ch. 15 - CLOSING ENTRIES Using the spreadsheet and...Ch. 15 - Prob. 6SEBCh. 15 - Prob. 7SEBCh. 15 - INCOME STATEMENT, STATEMENT OF OWNERS EQUITY, AND...Ch. 15 - FINANCIAL RATIOS Use the work sheet and financial...Ch. 15 - END-OF-PERIOD SPREADSHEET, ADJUSTING, CLOSING, AND...Ch. 15 - Prob. 1MYWCh. 15 - Dominique Fouque owns and operates Dominiques Doll...Ch. 15 - Prob. 1CPCh. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Prob. 2.1COPCh. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Prob. 2.4COPCh. 15 - Prob. 2.5COPCh. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Comprehensive Problem 2: Accounting Cycle with...Ch. 15 - Prob. 2.8COP
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- 4. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.arrow_forwardOn a multiple step income statement, the account interest expense would be located under A) Net sales B) COGS C) Other Revenues and expensesarrow_forwardWhere are selling and administrative expenses found on the multiple-step income statement? Da. after net income and before expenses b. before gross profit c. after sales and before gross profit Od. after gross profitarrow_forward
- (a) Prepare a multiple-step income statement.(b) Calculate the gross profit rate and the profit margin and explain what each means.arrow_forwardClassify each of the following items as revenues (R), expenses (EX), or withdrawals (W). Cost of salesarrow_forwardindicate whether the statement describes a multiple-step income statement or asingle-step income statement.a. Multiple-step income statement b. Single-step income statement Commonly reports detailed computations of net sales and other costs and expenses.arrow_forward
- View Policies Current Attempt in Progress Which of the following does not belong on a multi-step income statement? O Gross profit. O Net sales, Operating expenses. O Unearned revenue. Attempts: 0 of 1 used Submi Save for Laterarrow_forwardThe main purpose of the statement of profit or loss is to determine the amount of income and expenses the net profit or net loss the cost of sales the amount of accrued income and expenses O O O Oarrow_forwardWhich of the following best describes a single-step income statement? a.Operating expenses are divided into the subcategories of selling expenses and general expenses. b.Gross sales is shown first, less sales returns and allowances and sales discounts. c.Operating expenses are listed and subtracted from the gross profit to compute income from operations. d.All revenue items and their total are listed first, followed by all expense items and their total.arrow_forward
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