Profit and Loss Quiz

What is the purpose of a company determining if it has made a profit?

• To assess its financial health

• To decide on employee salaries

• To plan company parties

Which of the following is NOT a reason for identifying the different types of expenses a business might have?

• To calculate net profit accurately

• To create a marketing strategy

• To reduce unnecessary spending

Why is making money not the same as making a profit?

• Because making money refers to total revenue, while making a profit means earning more than the expenses

• Because making money involves investments, while making a profit does not

What is the money called that people earn from working?

• Profit

• Expense

• Salary

• Loss

What is the money called that a business earns after paying its expenses?

• Salary

• Revenue

• Loss

• Profit

What must businesses do to make money according to the text?

• Businesses must spend all their profits immediately.

• Businesses must make decisions that allow them to make money.

• Businesses must rely on luck to earn profits.

What are the bills that businesses must pay for the place where they do business most often called?

• Expenses

• Profits

• Losses

• Debts

What is a common payment that businesses make for the place where they operate?

• Rent or lease

• Utilities

• Insurance

What is considered another expense of doing business besides paying the electricity bill?

• Purchasing office supplies

• Paying salaries

• Advertising services

Why must business owners make a profit?

• To pay for personal expenses and to invest in the stock market

• To pay for business expenses such as buying supplies, shipping, taxes, and advertising

• To donate to charity