Standardizing Financial Statements

1. Which of the following is a correct statement regarding a method of drafting a company's income statement?

1. The single-step method requires totaling a company's revenue, then subtracting all of its costs.
2. The multi-step method requires calculating the gross profit then subtracting operating expenses.
3. All of these answers.
4. The non-operating section of the multi-step method covers all non-primary revenues and losses.

2. Which of the following statements regarding balance sheets is true?

1. A balance sheet covers a period of time.
2. Balance sheet account names and usage are up to the company producing the report.
   
3. The balance sheet's sections are assets, liabilities, and ownership equity.
   
4. All of these answers.

3. According to the accounting equation, net worth must equal ________.

1. assets minus liabilities
   
2. liabilities minus assets
   
3. 50% of assets
4. 50% of liabilities
   

4. Which of the following is usually listed first on a balance sheet?

1. liabilities
   
2. ownership equity
   
3. assets
   
4. cash flow