Question In January, DropoutEdu sold and delivered $100 worth of textbooks to customers. But, the customers only need to pay cash for the purchase in February. Assuming a 25% tax rate, how much would DropoutEdu report in earnings in January? Answer Answer: 75 Cash is irrelevant to income statement earnings. First, the goods were transferred in January, so it aligns
Question In January, DropoutEdu sold and delivered $100 worth of textbooks to customers. Assuming a 25% tax rate, how much would DropoutEdu report in earnings in January? Answer Answer: 75 Explanation: First, the goods were transferred in January, it aligns with the reporting period (January) on the statement. Second, revenue affects earnings to common shareholders. So, this transaction will show
Question When does an item show up on the income statement? A) The revenue or expense recognized or incurred in the period listed on the statement. B) When the cash is transferred from one party to another. C) Earnings to equity investors are affected. D) When cash is expected to be transferred from one party to another. Answer Answer: A
Question Does the income statement show financial information for a period of time or a point in time? A) Period of timeB) Point in time Answer Correct Answer: A) Period Explanation: The income statement displays financial information for a specific period rather than a point in time. It summarizes a company’s revenues, expenses, and resulting net income or loss over
Question Which of the following statements best describes the difference between “point in time” and “period of time” in financial statements? A) “Point in time” refers to a specific moment, while “period of time” refers to a range of moments.B) “Point in time” refers to a range of moments, while “period of time” refers to a specific moment.C) “Point in
When does an item show up on the income statement? A) The revenue or expense recognized or incurred in the period listed on the statement. B) When the cash is transferred from one party to another. C) Earnings to equity investors are affected. D) When cash is expected to be transferred from one party to another. Answer Answer: A and
How does the market typically value companies? A) Based on near-term earnings B) Based on long-term earnings C) Based on near-term cash flows D) Based on long-term cash flows Check Answer
