Multiple Choice: Using Income Data Select the correct answer for each of the following:

1. An income statement provides information on:

a. Cash receipts and disbursements for the period.

b. The amount of money contributed to the business entity by shareholders during the period.

c. The amount of money contributed to the business entity by creditors during the period.

d. The operating results for the business entity during the period.

2. Shareholders often find income statement information useful in:

a. Developing estimates of future cash flows from the business entity.

b. Developing estimates of the value of long-term assets held by the business entity.

c. Determining the amount of long-term debt and new equity securities that have been sold during the period.

d. All of the above.

3. Income statement information often is useful to:

a. Individual investors.

b. Creditors and suppliers.

c. Labor unions.

d. All of the above.

4. Corporate management focuses on net income:

a. As a primary basis for deciding when to sell long-term assets.

b. As an important measure of the operating success for the current period.

c. As a way of determining how much cash was generated from operations during the period.

d. As a way of determining how much cash was generated from the sale of stock and long-term liabilities during the period.

ui ry Income statement data is especially useful in:

a. Determining trends in profitability from period to period.

b. Comparing the profitability of similar companies.

c. Deciding whether to discontinue operations in an operating division.

d. All of the above.