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Homework answers / question archive / 1)Public companies must show on the income statement the earnings-per-share effect of Income from continuing operations O gross profit osales revenue O all of the above 2)Which of the following would NOT be a major income classification item found in a multi-step income statement? Income from continuing operations Results from discontinued operations Prior period adjustments Gross margin
1)Public companies must show on the income statement the earnings-per-share effect of Income from continuing operations O gross profit osales revenue O all of the above
2)Which of the following would NOT be a major income classification item found in a multi-step income statement? Income from continuing operations Results from discontinued operations Prior period adjustments Gross margin
1)Right option is - all of the above
EPS is directly related with sales, gp and Income from continuing operation.
2)
The correct answer is C) Prior period adjustments because the main items a multi step income statement segregates the operating revenues and operating expenses from the nonoperating revenues, nonoperating expenses, gains, and losses. The multiple-step income statement also shows the gross profit (net sales minus the cost of goods sold).
So, it does not include the previous adjustments in the income statement. The example of multi step income statament is given below:
It clearly depicts that It contains:
1) Income from continuing operations
2) Results from discontinued operations
3) Gross margin
But this doesn't include the previous year adjustments as a major head in this income statement
| Multi-step income statement | ||||
| ABC | ||||
| Income Statement | ||||
| For Year Ended December 31, 2020 | ||||
| Sales | ||||
| Less: | Sales discounts | - | ||
| Net sales | - | |||
| Cost of goods sold | ||||
| Gross profit | - | |||
| Operating expenses: | ||||
| Selling expenses: | ||||
| Total selling expenses | - | |||
| General and administrative expenses: | ||||
| Total general and administrative expenses | ||||
| Total operating expenses | - | |||
| Net income | ||||
| - | ||||
| $ - |
