BS10 T2 CT2 Practice

What does an income statement show?

• The total assets of a business

• The profits or losses over a period

• The cash inflow and outflow of a business

• The changes in shareholders' equity

Which of the following is NOT included in an income statement?

• Gross profit

• Revenue

• Liabilities

• Expenses

Gross profit is calculated as:

• Sales revenue - Total expenses

• Sales revenue - Cost of goods sold

• Net profit - Expenses

• Net profit + Expenses

What is the formula to calculate net profit?

• Gross profit - Expenses

• Sales revenue - Cost of goods sold

• Sales revenue - Gross profit

• Total assets - Total liabilities

Which term refers to the money left after all expenses, including interest, are paid?

• Gross profit

• Retained profit

• Net profit

• Cost of goods sold

Retained profit is calculated by:

• Adding all revenues and expenses

• Subtracting net profit from tax and dividends

• Subtracting liabilities from assets

• Adding net profit to expenses

An increase in expenses without a change in revenue will cause:

• Gross profit to decrease

• Gross profit to increase

• Net profit to increase

• Net profit to decrease

If revenue is $500,000 and cost of goods sold is $300,000, gross profit is:

• $200,000

• $300,000

• $500,000

• $800,000

Rent, wages, and utilities are involved in ....

• Direct costs

• Fixed assets

• Expenses

• Variable costs

Which of these will reduce net profit?

• Increased sales revenue

• Reduced cost of goods sold

• Higher operating expenses

• Higher gross profit