Multiple choice: Question 1) Limitations of internal control include: a. Human e

Question

Multiple choice:

Question 1) Limitations of internal control include:

a. Human error.

b. Human fraud.

c. Cost-benefit standard.

d. Human error and fraud.

e. All of these answers are correct.

Question 2) An income statement on which the cost of goods sold and operating expenses are added together and subtracted from net sales in one step to get net income is a(n):

a. Balanced income statement.

b. Single-step income statement.

c. Multiple-step income statement.

d. Merchandise income statement.

e. Unclassified income statement.

Explanation / Answer

So the answer is (e) i.e. all of these answer are correct

2. An income statement on which the cost of goods sold and operating expenses are added together and subtracted from net sales in one step to get net income is   b. Single-step income statement (answer)

Difference between Multiple-step Income statement and Single-step Income statement

In Multiple –step Income statement all the elements in the income statement such as cost of goods sold, operating income statement, non-operating income statement are separately shown. Accordingly all the sub classification of Income like, Gross profit, operating income, net income is separately shown.

In Single-step Income statement, there will be only two subclasses i.e. , Revenue and Expenses and the net income will be the difference between these two. There will be no break up of profits like gross margin, operating income etc. similarly there will not be any expense break downs.

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