IB Business Management - 3.4 - Profit and Loss Account Quiz

Which of the following is the primary purpose of a profit and loss account?

• To show the financial position of a business at a specific point in time

• To calculate the profit or loss over a specified period

• To list all assets and liabilities of the business

• To calculate the taxes owed by the business

If a business's expenses are greater than the gross profit for a given period of time, the business…

• Can distribute a portion of the profits to shareholders

• Have a positive profit before interest and tax payments

• Has made a loss

• Has performed well on financial performance indicators

What is included in the cost of sales on a profit and loss account?

• Rent and utilities

• Advertising costs

• Direct costs of producing goods or services sold

• Employee salaries in the administrative department

Which of the following is included in the cost of sales in a profit and loss account?

• Interest on loans

• Rent for office space

• Raw materials used in production

• Salaries of administrative staff

In a profit and loss account, gross profit is calculated by subtracting which costs from sales revenue?

• Fixed Costs

• Expenses

• Depreciation

• Cost of Sales

What does "profit for period" in a profit and loss account represent?

• The amount left after expenses, interest and taxes have been deducted from gross profit

• The total revenue minus direct costs

• The income before tax and interest deductions

• The amount of profit retained in the business after dividends have been paid

Which of the following would NOT be found on a profit and loss account?

• Sales revenue

• Long-term liabilities

• Gross profit

• Expenses

What is the formula to calculate gross profit?

• Revenue - Expenses

• Revenue - Cost of Sales

• Revenue - Interest

• Revenue - Taxes

In a profit and loss account, expenses are:

• The indirect costs of running the business

• The direct costs of production

• The total costs of the business for a given time period

• The amount a business must pay to the government

Which of the following is NOT classified as an expense on a profit and loss account?

• Depreciation on machinery

• Insurance premiums

• Interest on bank loans

• Salaries