Accounting Quiz - Unit 5

What is the primary purpose of a profit and loss (P&L) statement?

• To show the company's assets and liabilities

• To display the company's revenue and expenses over a period of time

• To list the company's inventory

• To provide a forecast of future profits

Which of the following affects business revenue?

• Employee satisfaction

• Supply and demand

• Company logo design

• Office location

What is the formula for calculating profit?

• Revenue - Expenses

• Assets - Liabilities

• Income + Expenses

• Revenue + Assets

Why is profit motive important for businesses?

• It encourages businesses to lower prices

• It drives innovation and efficiency

• It reduces competition

• It eliminates financial risks

Which economic system emphasizes private enterprise and the U.S. economy?

• Command economy

• Traditional economy

• Market economy

• Mixed economy

What does the term "Net Income" refer to?

• Total revenue before expenses

• Total revenue after expenses and taxes

• Total assets minus liabilities

• Total profit before interest

Which of the following is considered an operating expense?

• Interest expense

• Cost of goods sold

• Depreciation

• Revenue

How can a company increase its profits?

• By increasing expenses

• By reducing costs and increasing sales

• By hiring more employees

• By lowering prices

What is the primary goal of accounting?

• To manage the company's workforce

• To provide financial information for decision-making

• To forecast market trends

• To design marketing strategies

Which accounting method records transactions when cash changes hands?

• Accrual accounting method

• Cost accounting method

• Managerial accounting method

• Cash accounting method