1. In which of the following circumstances is a firm least likely to recognize revenue according to the FASB?

1. Risks and rewards of ownership of the goods have been transferred, but the buyer is unlikely to pay.
2. The goods have been delivered to the buyer.
3. There is evidence of an arrangement between the buyer and the seller.

2. When an income statement explicitly shows gross profit as a subtotal, it most likely uses a:

1. Multistep format.
2. Common-size format.
3. Single-step format.