Using Financial Accounting Information
10th Edition
ISBN: 9781337276337
Author: Porter, Gary A.
Publisher: Cengage Learning,
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Textbook Question
Chapter 2, Problem 2.7.4P
Multiple-Step Income Statement and Profit Margin
Refer to the list of income statement items in Problem 2-6. Assume that Shaw Corporation classifies all operating expenses into two categories: (1) selling and (2) general and administrative.
Required
Comment on Shaw’s profitability. What other factors need to be taken into account to assess Shaw’s profitability?
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OBIECTIVES:
I. Identify the elements of the SCI and describe each of these items for service business and merchandising business
II. TOPIC: STATEMENT OF COMPREHENSIVE INCOME
III. Direction:
A.
Write the correct word or words to complete the statement.
1. An example for this is gain or losse on hedging derivatives.
2.An approach used on preparing statement of comprehensive income that shows expense by its nature.
3.An increases in economic benefits during the period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity.
4.This occurs when revenue is less than expenses.
5.lt arises in the course of the ordinary activities of a business and is referred to by a variety of different names including sales, fee, interest, and etc.
6. The difference between an Income Statement and SCI ...
7. The nature of business for a single step statement of comprehensive income
8. The nature of business for a multi-step…
1. What is a Statement of Comprehensive Income?
2. Why are the accounts found under the SCI are called temporary accounts?
3. What are the two forms of SCI? Differentiate one from the other.
4. What is the difference between the SCI of a service entity from a merchandising entity? 5. What is the formula in computing Net Income (Loss) for Service Entities?
6. What is the formula in computing Net Sales?
7. What is the formula in computing Cost of Goods Sold?
Using the information provided below from Ben Company prepare two income
statements: A normal GAAP Income Statement A CVP Income Statement These
Income Statements should be done in good form and in Excel. Include formulas.
Chapter 2 Solutions
Using Financial Accounting Information
Ch. 2 - Prob. 2.1ECh. 2 - Prob. 2.2.1ECh. 2 - Prob. 2.2.2ECh. 2 - Classification of Financial Statement Items Regal...Ch. 2 - Prob. 2.4.1ECh. 2 - Prob. 2.4.2ECh. 2 - Prob. 2.4.3ECh. 2 - Prob. 2.5ECh. 2 - Prob. 2.6ECh. 2 - Prob. 2.7E
Ch. 2 - Prob. 2.8ECh. 2 - Statement of Retained Earnings Landon Corporation...Ch. 2 - Prob. 2.10ECh. 2 - Prob. 2.11ECh. 2 - Prob. 2.12MCECh. 2 - Prob. 2.13MCECh. 2 - Prob. 2.14MCECh. 2 - Prob. 2.1.1PCh. 2 - Prob. 2.1.2PCh. 2 - Prob. 2.2PCh. 2 - Prob. 2.3.1PCh. 2 - Prob. 2.3.2PCh. 2 - Prob. 2.3.3PCh. 2 - Prob. 2.4.1PCh. 2 - Prob. 2.4.2PCh. 2 - Prob. 2.5.1PCh. 2 - Prob. 2.5.2PCh. 2 - Prob. 2.5.3PCh. 2 - Prob. 2.6.1PCh. 2 - Prob. 2.6.2PCh. 2 - Prob. 2.7.1PCh. 2 - Prob. 2.7.2PCh. 2 - Prob. 2.7.3PCh. 2 - Multiple-Step Income Statement and Profit Margin...Ch. 2 - Prob. 2.8PCh. 2 - Prob. 2.9PCh. 2 - Prob. 2.10MCPCh. 2 - Prob. 2.11MCPCh. 2 - Prob. 2.12MCPCh. 2 - Prob. 2.1.1AAPCh. 2 - Prob. 2.1.2AAPCh. 2 - Prob. 2.2AAPCh. 2 - Prob. 2.3.1AAPCh. 2 - Prob. 2.3.2AAPCh. 2 - Prob. 2.3.3AAPCh. 2 - Prob. 2.4.1AAPCh. 2 - Prob. 2.4.2AAPCh. 2 - Prob. 2.5.1AAPCh. 2 - Prob. 2.5.2AAPCh. 2 - Prob. 2.5.3AAPCh. 2 - Prob. 2.6.1AAPCh. 2 - Prob. 2.6.2AAPCh. 2 - Prob. 2.7.1AAPCh. 2 - Prob. 2.7.2AAPCh. 2 - Prob. 2.7.3AAPCh. 2 - Multiple-Step Income Statement and Profit Margin...Ch. 2 - Prob. 2.8.1AAPCh. 2 - Prob. 2.8.2AAPCh. 2 - Prob. 2.9AAPCh. 2 - Prob. 2.10AAMCPCh. 2 - Prob. 2.11.1AAMCPCh. 2 - Prob. 2.11.2AAMCPCh. 2 - Prob. 2.12AAMCP
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- indicate 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_forwardWhich of the following statements is correct? Mutiple Choice The term single step income statement is sometimes used to describe a classified income statement If a business is to earn a net income, the gross profit on sales must be greater than operating expenses Salaries of office employees would be grouped with the setting expenses in the Operating Expenses section of the income statement Sales less Operating Expenses equals Gross Profitarrow_forwardListing Expenses by Function vs Nature Question; How would you list/categorize the expenses (Operating Expenses) in a single-step/multiple-step income statement by nature or by function? Some e.g's/explanation would be very helpful.arrow_forward
- 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.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_forwarda. What is your company’s primary revenue, secondary revenue, and gains? b. What is your company’s primary expenses, secondary expenses, financial activity generated expenses, and losses? c. What is the revenue trend? Does the 10-K or 10-Q discuss primary revenues, as well as other revenue types? d. What do the accounting policies say in the annual report (footnotes) regarding the cost of revenue? What are the drivers to the cost of revenue and the trends?arrow_forward
- Identify which one of the following formula is used to calculate the net income of the service companies in an accounting period? a.Net Purchases – Cost of goods sold b.Net Sales – Cost of goods sold c.Services Revenue – Operational and Administrative Expenses d.Operational and Administrative Expenses – Service Revenuearrow_forwardexplain the image provided the Gross profit margin, Return on sales, return on assets, return on equity and give recommendationarrow_forwardIdentify how each of the following transactions affects the company's financial statements. For the balance sheet, Identify how each transaction affects total assets, total llabilities, and equity. For the Income statement, Identify how each transaction affects profit. If there is an Increase, select a *+" In the column or columns. If there is a decrease, select a "-" In the column or columns. If there is both an Increase and a decrease, select a *+/-" In the column or columns. The Iline for the first transaction Is completed as an example. Income Statement Balance Sheet Total Total Transaction Equity Profit Assets Liabilities 1 Owner invests cash 2 Seli services for cash 3 Acquire services on credit 4 Pay wages with cash 5 Owner withdraws cash 6 Borrow cash with note payable 7 Sell services on credit 8 Buy office equipment for cash 9 Collect receivable from (7) 10 Buy asset with note payablearrow_forward
- indicate whether the statement describes a multiple-step income statement or asingle-step income statement.a. Multiple-step income statement b. Single-step income statement Separates income from operations from the other revenues and gains.arrow_forward1. Explain and describe the type of information needed by each of these users: Revenue expenses profitability debt 2. Explain each accounting principles Accrual principle Conservatism principle Consistency principle Cost principle Economic entity principle Full disclosure principle Going concern principle Matching principle Materiality principle Monetary unit principle Reliability principle Revenue recognition principle Time period principle 3. Define and explain each qualitative characteristics of useful financial information: Verifiability Timeliness Understandability Comparability 4. Differentiate the types of business according to its activity: Service business Merchandising business Manufacturing businessarrow_forwardWhich of the following accounts would be reported under operating expenses on a multi-step income statement? A. sales B. advertising expense C. sales returns and allowances D. interest expensearrow_forward
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