On the income statement:
A) selling, general and administrative expenses are the costs of operations that are not directly related to merchandise purchases and occupancy.
B) income tax expense will not be found on the income statement since corporations do not pay taxes.
C) net income is another term for income from continuing operations.
D) selling, general and administrative expenses are shown before gross profit.

Question

Quizplus · Accepted Answer

Selling, general and administrative expenses (SG&A) are the costs of operations that are not directly related to merchandise purchases and occupancy. These expenses include salaries, rent, marketing, and other overhead expenses. SG&A is shown after gross profit and before operating income on the income statement.

Option B is incorrect. Income tax expense is a mandatory expense that corporations have to pay, and it is shown on the income statement.

Option C is incorrect. Net income is the final amount of income earned by a company after all expenses, including income taxes and any gains or losses, have been deducted from revenues. Income from continuing operations represents the income earned by a company from its primary business operations, excluding any gains or losses from discontinued operations, extraordinary items, or accounting changes.

Option D is also incorrect. Gross profit represents the revenue that remains after deducting the cost of goods sold. SG&A expenses are shown after gross profit and before operating income.

On the Income Statement