Measuring Business Financial Success

What is the cost of sales?

• The total revenue generated by a business.

• The direct costs attributable to the production of the goods sold by a company.

• The total expenses incurred by a business.

• The net profit of a business.

How is gross profit calculated?

• Total revenue minus total expenses.

• Total revenue minus cost of sales.

• Total revenue minus net profit.

• Total revenue minus liabilities.

What does a positive gross profit indicate?

• The business is operating at a loss.

• The business is making more money than it costs to produce its goods.

• The business has no liabilities.

• The business has a high net profit.

What does a negative gross profit indicate?

• The business is making a profit.

• The business is spending more on production than it earns from sales.

• The business has no assets.

• The business has a high net profit.

How is net profit calculated?

• Gross profit minus operating expenses and taxes.

• Total revenue minus cost of sales.

• Total revenue minus liabilities.

• Gross profit plus operating expenses.

What does a positive net profit indicate?

• The business is operating at a loss.

• The business is profitable after all expenses are deducted.

• The business has no liabilities.

• The business has a high gross profit.

What does a negative net profit indicate?

• The business is making a profit.

• The business is spending more than it earns after all expenses.

• The business has no assets.

• The business has a high gross profit.

Which financial statement shows a company's revenues and expenses over a specific period?

• Balance sheet.

• Income statement (profit and loss account).

• Cash flow statement.

• Statement of changes in equity.

Which financial statement provides a snapshot of a company's financial position at a specific point in time?

• Income statement.

• Balance sheet.

• Cash flow statement.

• Statement of changes in equity.

What are assets?

• The debts a company owes.

• The resources owned by a company that have economic value.

• The total revenue of a company.

• The net profit of a company.