The date by which federal income tax withholding, Social ...

[rosent76]

The date by which federal income tax withholding, Social Security, and Medicare taxes must be paid depends on the amount of these taxes.
 a. True
   b. False
   Indicate whether the statement is true or false

Question 2

Review the following income statement for Up Against the Wall, a wallpaper store. Then answer the following questions.
 
  Up Against the Wall
   Income Statement
   For the Month Ended July 31, 2012
 
  Revenues 17,440
  Cost of goods sold (6,975)
  Gross profit 10,465
  Expenses
   Rent  1,650
   Wages 1,369
   Advertising 830
  Total expenses (3,840)
  Net income 6,625
 
  a. What does gross profit represent?
  b. Can you tell whether or not the expenses are reasonable compared to the amount of income?
  c. Ms. Machier, the owner of Up Against the Wall, is looking for a partner. As a potential investor, does this income statement present a favorable or unfavorable impression of the success of the business?
  d. What other information would you require before you invested in this business?

[ErinKing]

Answer to Question 1

True

Answer to Question 2

a. Gross profit is the first profit. It is calculated by subtracting cost of goods sold from revenues. It represents the markup on the cost of inventory sold.
b. No.
c. This income statement presents a favorable impression.
d. Investors would ask to see a balance sheet, statement of cash flows, and a statement of changes in shareholders' equity in order to evaluate the success of a business more fully.