Answer the following statements true (T) or false (F)

Question

1. The Statement of Retained Earnings for a merchandiser is prepared differently than that of a service business.
2. Long-term assets on the Balance Sheet represent assets that will last longer than one operating cycle of the business.
3. On the Balance Sheet, assets are listed in alphabetical order.
4. A 5-year note payable to be repaid in equal payments throughout the 5-year period, would be listed on the Balance Sheet as a long-term liability only.
5. Liam's Lemonade has sales revenue of $48,000, cost of goods sold $12,000, interest expense $4,000, and operating expenses $6,000. Liam's operating income is $26,000.

Answer 1

1. FALSE
2. TRUE
3. FALSE
4. FALSE
5. FALSE
Explanation: operating income would be gross profit - operating expenses. $48,000 - $12,000 - $6,000 = $30,000