p15 - Income Statement and Related Information 4 - 5...

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Income Statement and Related Information 4 - 5 TRUE-FALSE —Conceptual 1. The income statement is useful for helping to assess the risk or uncertainty of achieving future cash flows. 2. A strength of the income statement as compared to the balance sheet is that items that cannot be measured reliably can be reported in the income statement. 3. Earnings management generally makes income statement information more useful for predicting future earnings and cash flows. 4. The transaction approach of income measurement focuses on the income-related activities that have occurred during the period. 5. Companies frequently report income tax expense as the last item before net income on a single-step income statement. 6. Both revenues and gains increase both net income and owners’ equity. 7. Use of a multiple-step income statement will result in the company reporting a higher net income than if they used a single-step income statement. 8. The primary advantage of the multiple-step format lies in the simplicity of presentation and
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p15 - Income Statement and Related Information 4 - 5...

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