Income Statement Quiz

What does an income statement show?

• The financial condition of a business at a specific date

• The changes in the owner’s capital account

• The revenue, expenses, and net income or loss over a period of time

• The total assets and liabilities of a business

What are the three lines included in the heading of an income statement?

• Business name, Balance Sheet, Reporting Date

• Business name, Income Statement, Reporting Period

• Business name, Owner’s Equity, Current Year

• Business name, Total Revenue, Current Month

Where do you find the account titles and balances for the income statement?

• General journal

• Balance Sheet columns of the worksheet

• Income Statement columns of the worksheet

• General ledger

What is the formula to calculate net income or net loss?

• Total expenses – Total revenue

• Total revenue – Total expenses

• Beginning capital + Total revenue

• Total revenue + Total expenses

How should the revenue and expense account titles be formatted when filling out an income statement?

• Centered and bolded

• Indented slightly to the right and left-aligned

• Fully justified with no indent

• Written in all caps

What should you do if total expenses are greater than total revenue?

• Record a net income

• Record a net loss

• Adjust the revenue amount

• Add the expenses to the revenue

How do you format subtotals (e.g., total revenue, total expenses) on an income statement?

• Bold and underlined twice

• Italicized and left-aligned

• Single underline below the subtotal

• Written in all caps

What is the correct formatting for the net income or net loss amount on the income statement?

• Single underline

• Double underline

• Indented and italicized

• Written in parentheses

What section comes first on the income statement?

• Expenses

• Net Income or Net Loss

• Revenue

• Assets

Why is the heading important in an income statement?

• It includes the total amounts for revenue and expenses.

• It identifies the business, type of report, and reporting period.

• It lists all account balances from the worksheet.

• It explains how the net income or loss was calculated.