B) the income statement
C) the retained earnings statement
D) the cash flow statement
Answer: B
Diff: 1 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
26) The date of the income statement:
A) covers one day in time
B) covers a period of time, usually for an accounting period
C) is not dated
D) may cover a period of time or only one day in time, like a snapshot photograph
Answer: B
Diff: 3 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
27) Operating expenses appear on the income statement:
A) directly after gross margin
B) directly after cost of goods sold
C) directly after revenue
D) do not appear on the income statement
Answer: A
Diff: 2 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
28) Common shares is a component of:
A) total assets
B) total liabilities
C) share capital
D) retained earnings
Answer: C
Diff: 2 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
29) Cost of goods sold is:
A) added to sales on the income statement
B) deducted from sales on the balance sheet
C) deducted from sales on the income statement
D) added to sales on the retained earnings statement
Answer: C
Diff: 2 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
30) Suppose The Fruit Group buys a kiwi for $.10 and sells the kiwi for $.50. The cost of goods sold would be:
A) $.10
B) $.40
C) $.50
D) $.05
Answer: A
Diff: 1 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
31) Net income is:
A) deducted from beginning retained earnings on the retained earnings statement
B) added to beginning retained earnings on the retained earnings statement
C) added to assets on the balance sheet
D) deducted from net sales on the income statement