Unit 5 review

Which of the following phrases effectively describes a business's income statement?

• Budget estimate

• Financial picture

• Income preview

• Cash flow report

Another term for an income statement is a(n)

• expense statement

• purchasing statement

• interest statement

• operating statement

Which of the following is the basic calculation used to analyze an income statement?

• Revenue plus sales

• Income minus expenses

• Assets minus liabilities

• Sales plus operating costs

Interest a business earns from its bank accounts is included in which category of the income statement?

• Assets

• Net income

• Revenue

• Gross sales

A business that loses items to theft includes those items in which category of the income statement?

• Operating expenses

• Long-term liability

• Capital goods

• Cost of goods sold/Cost of sales

What category of an income statement indicates total profit?

• Bottom line

• Gross profit

• Cash flow

• Net profit

Which of the following is an example of an expense that a business would include in the operating-expenses category of an income statement?

• Shipping charges

• Cost of raw materials

• Customer returns

• Insurance payments

The “bottom line” in a business’s income statement indicates

• net income

• gross revenue

• net worth

• total costs

One of the reasons why an income statement should be as accurate as possible is that businesses use it to develop additional

• research reports

• marketing activities

• operating policies

• financial documents

What does an accurate income statement often help a business identify?

• Trouble spots

• Excessive income

• Potential sales

• Problem vendors