Which of the following statements is correct?
Posted: Sat Aug 07, 2021 7:00 am
A) Revenues are reported on the income statement regardless of whether the customer has paid
for the goods or services.
B) Expenses are reported on the income statement during the period they are paid for.
C) Net income includes a deduction for dividend payments made to stockholders.
D) Net income normally equals the net cash generated by operations.
Answer: A
Explanation: Accrual accounting requires revenues to be reported in the period of delivering
goods or services, whether or not the customer has paid for the goods or services.
Difficulty: 2 Medium
Topic: Financial statements—Income statement
Learning Objective: 01-01 Recognize the information conveyed in each of the four basic
financial statements and the way that it is used by different decision makers (investors, creditors,
and managers).
for the goods or services.
B) Expenses are reported on the income statement during the period they are paid for.
C) Net income includes a deduction for dividend payments made to stockholders.
D) Net income normally equals the net cash generated by operations.
Answer: A
Explanation: Accrual accounting requires revenues to be reported in the period of delivering
goods or services, whether or not the customer has paid for the goods or services.
Difficulty: 2 Medium
Topic: Financial statements—Income statement
Learning Objective: 01-01 Recognize the information conveyed in each of the four basic
financial statements and the way that it is used by different decision makers (investors, creditors,
and managers).