IGCSE Business Studies - 5.3 Income Statements Quiz

What is profit?

• Total revenue minus total costs

• Total sales minus total production

• Cash flow minus expenses

• Revenue from investment

Which of the following is a key importance of profit to a private sector business?

• Decreased competition

• Reward for risk-taking

• Minimization of wages

• Government funding

Which term refers to the total income earned by a business from selling goods and services before any costs are deducted?

• Cash flow

• Revenue

• Gross profit

• Net profit

Profit is important for businesses because it can be used for:

• Paying dividends to shareholders

• Paying taxes only

• Expanding the business

• Both A and C

What is meant by retained profit?

• Profit given to shareholders

• Profit kept in the business for reinvestment

• Profit used to pay off debts

• Profit paid as interest to creditors

In private sector businesses, profit is crucial for:

• Paying government taxes

• Donating to charities

• Reinvesting in the business

• Securing government contracts

Private sector businesses are motivated to make a profit to:

• Reward employees with bonuses

• Pay off existing liabilities

• Avoid bank loans

• Reward owners and shareholders

Which of the following is included in the income statement?

• Total assets

• Cash flow forecast

• Revenue

• Market share

Gross profit is calculated by:

• Subtracting total costs from total revenue

• Subtracting cost of sales from revenue

• Adding operating expenses to total revenue

• Dividing revenue by cost of sales

What does an income statement show?

• A company's net worth

• A company's financial position at a specific date

• The profit or loss made over a period of time

• The cash balance at the end of a period