Profit and Loss Account Quiz

What is the purpose of a profit and loss account?

• To show the assets and liabilities of a business

• To summarize a business's financial performance over a specific period, determining if its gaining or losing

• To list all the expenses of a business

• To provide information about the shareholders of a business

Which of the following is NOT typically found on a profit and loss account?

• Sales/Revenue

• Cost of Goods Sold

• Cash Flow

• Operating Expenses

What is calculated by subtracting the cost of goods sold from the total sales on a profit and loss account?

• Gross Profit

• Operating Income

• Net Income

• Non-operating Income

Which of the following is an operating expense that would appear on a profit and loss account?

• Loan

• Dividends Paid

• Rent

• Stock Investments

What does the net profit on a profit and loss account represent?

• Total revenue generated by the business

• The amount of money the business owes to creditors

• The amount generated by the business after all expenses are deducted

• The amount of cash the business has on hand