When estimating income for the income and expense statement, you should:
A) use gross income.
B) include expected pay increases.
C) adjust expenses for inflation.
D) use net income less capitalized interest.
E) include the value of any assets purchased.

Question

Quizplus · Accepted Answer

When estimating income for the income and expense statement, it is best to use the gross income. Gross income is the total amount of income earned before any deductions or taxes are taken out. This provides a more accurate picture of the overall income and allows for a clearer comparison to expenses. Including expected pay increases, adjusting expenses for inflation, or including the value of assets purchased would not be appropriate when estimating income for the income and expense statement. Using net income less capitalized interest would be appropriate for other financial statements, but not for the income and expense statement.

When Estimating Income for the Income and Expense Statement, You