1. The major elements of the income statement are A) revenue, cost of goods sold, selling expenses, and general expense. B) operating section, nonoperating section, discontinued operations, and cumulative effect. C) revenues, expenses, gains, and losses. D) revenues, irregular items, and general expenses. 2. The income statement reveals A) resources and equities of a firm at a point in time. B) resources and equities of a firm for a period of time. C) net earnings (net income) of a firm at a point in time. D) net earnings (net income) of a firm for a period of time. 7 3. Which of the following is an example of managing carnings down? A) Changing estimated bad debts from 3 percent to 2.5 percent of sales. B) Revising the estimated life of equipment from 10 years to 8 years. C) Not writing off obsolete inventory. D) Reducing research and development expenditures. 4. Which of the following is an example of managing earnings up? A) Decreasing estimated salvage value of equipment. B) Writing off obsolete inventory. C) Underestimating warranty claims. D) Accruing a contingent liability for an ongoing lawsuit