Question

1/ The multiple-step format of the income statement reports a series of intermediate subtotals such as gross profit, operating income, and income before taxes. TRUE OR FALSE

2/ An option for a customer to purchase additional goods at a discount from list price is only a performance obligation if the discount is a material right that the customer would not receive otherwise. TRUE OR FALSE

3/ From a financial accounting perspective, the main purposes of a system of internal control are to improve the accuracy and reliability of accounting information and to safeguard assets. TRUE OR FALSE

4/ In a good system of internal control, the person who initiates a transaction should be allowed to effectively control the processing of the transaction through its final inclusion in the accounting records. TRUE OR FALSE

5/ The income statement approach to calculating bad debt expense should not be used if it results in a carrying value of accounts receivable that is materially different from what would be obtained under a balance sheet approach. TRUE OR FALSE

Answer 1

1) True

Multimedia lMultiple Step Income Statement is the template that use to prepare income statement by recording the operating income and operating expenses separately from non-operating income and non-operating expenses.

So it will figured it out subtotals of margin etc.

2) False

Additional discount has been given to customer for increase relationship with customer and encourage customer to purachse good in higher quantity, discount may given for increase in performance obligation but it cound not be mean that it is given only due to performance obligation

3)True

Main purpose of internal control is to safegaurd the asset and accounting information and ensure accuracy of those information

4) False

In good internal control system segregation of duty have been assigned to different person so that no one person can have full control over the transaction which minimize the impact of fraud etc..

5) True

Income statement approach can not be used where value of receivable is different from balance sheet approach as it will lead to confusion and incorrect decisionmaking .