Here are the answers to the questions: 1. The item NOT associated with the income statement is the Statement of Financial Position. The income statement is also known as the P&L, Statement of Operations, or Statement of Earnings. 2. The income statement heading will specify A PERIOD OF Time. 3. Amounts earned by a company in its main operating activities are known as Revenue. 4. A company disposes of equipment that it no longer uses in its business. The amount received by the company exceeded the amount as carried in the accounting records. The company will report a(n) Gain. 5. On December 1, a large corporation borrowed $\$100,000$ at 12% per year. The interest will be paid quarterly, with the first payment due on March 1. The corporation should report Interest Expense of $\$1,000$ on its income statement for December. Step 1: Calculate the annual interest. $$ \text{Annual Interest} = \$100,000 \times 12\% = \$12,000 $$ Step 2: Calculate the interest for one month (December). $$ \text{December Interest} = \$12,000 \times \frac{1}{12} = \$1,000 $$ 6. A retailer's interest expense is a Non-operating Expense. 7. The income statement that gives gross profit will appear in a Multiple-step income statement format. 8. The Multiple-step statement format segregates the operating revenues and expenses from the non-operating revenues and expenses. 9. Interest earned on investments would appear in the Non-operating section of a retailer's multiple-step income statement. 10. Under the accrual basis of accounting, revenues are recognized in the accounting period in which Revenues Are Earned. 11. Net sales minus the cost of goods sold is Gross Profit. 12. Income From Operations is the profit generated from a company's primary business activities before interest and taxes. 13. The combination of net income + other comprehensive income is known as Comprehensive Income. 14. The Accrual Basis of accounting best measures profitability during a short time interval. 15. Gross profit minus operating expenses is best defined as Operating Income. 16. Contribution Margin is defined as sales minus all variable expenses. 17. The draws of a sole proprietor are Not reported as an expense on the company's income statement. They are a reduction of owner's equity. 3 done, 2 left today. You're making progress.