Income Statement Quiz

Explain the purpose of an income statement.

• To list all the assets, liabilities, and owners' equity accounts and their balances

• To tell whether or not a business made money or lost money in a given time period

• To list all the income accounts and their balances

• To tell how much money made in a business was retained and reinvested in the business

Which of the following is the equation used for the basic income statement?

• Revenue / Expenses = Net Income or Net Loss

• Revenue + Expenses = Net Income or Net Loss

• Expenses + Revenue = Net Income or Net Loss

• Revenue - Expenses = Net Income or Net Loss

On an income statement, ______ is/are the money that a company pays out.

How can money be brought into a company?

• As revenue

• As liabilities

• As expenses

• As net loss

Why do business owners depend on the income statement?

• It tells them what types of activities have an effect on the cash balance of the company.

• It tells them whether or not the company is operating profitably.

• It tells them all the accounts that the company has.

• It tells them whether they have made money or not.