Mountain Corp. experienced the following events and transactions during 2017:
$ 1 =$ Dividends declared and paid to Mountain's shareholders
$ 2 =$ Cost of goods sold
$ 3 =$ Gain on disposal of a major segment of the business
$ 4= $ Depreciation expense
$ 5= $ Gain from early debt retirement
Using the numbers of the events and transactions, identify which of the following sequences is the correct order for presenting the items on the income statement.
A)5, 1, 3, 2
B)2, 4, 5, 3
C)4, 5, 2, 3
D)2, 4, 3, 5, 1

Question

Quizplus · Accepted Answer

The correct sequence for presenting the items on the income statement is revenue (2), operating expenses (4 and 5), and then other revenue and expenses (3). Event 1 is not relevant to the income statement as it involves a sale of shares, which is not an operating activity. Therefore, Choice B is the correct order.

Mountain Corp 1= 1 =1= Dividends Declared and Paid to Mountain's Shareholders

Mountain Corp $1 =$ Dividends Declared and Paid to Mountain's Shareholders