5-1 Business Income, Revenues, Expenses, and Profits Quiz

What is a Balance Sheet?

• A statement showing only liabilities

• A financial statement showing assets, liabilities, and owners' equity

• A report of only the company's income

• A document listing only expenses.

Capital is money used to make an investment, produce a product, fund operations, and ______.

• generate income

• pay taxes

• reduce liabilities

• increase expenses

What does Cost of Goods Sold include?

• Only the cost of raw materials

• The cost of raw materials, direct labor, and manufacturing costs

• Only direct labor costs

• Only manufacturing costs.

Earnings Before Interest and Taxes (EBIT) is calculated as Operating Income minus ______.

• non-operating income and non-operating expenses

• only taxes

• only interest

• only operating expenses

Gross Profit is calculated as ______.

• Revenue minus Cost of Goods Sold

• Revenue minus Operating Expenses

• Revenue minus Interest

• Revenue minus Taxes

What is Income?

• Money received from doing business, including sales revenue and other income

• Only sales revenue

• Only investment returns

• Only interest income.

Interest Expense is money spent to pay for borrowed money and is calculated as ______.

• the interest rate times the outstanding principal amount of the debt

• only the interest rate

• only the principal amount

• only the total debt

What is Inventory?

• Products that have been purchased or produced, with the intent to sell to customers

• Only products that have been sold

• Only raw materials

• Only finished goods.

A Limited Liability Company combines the limited liability aspect of a corporation with ______.

• pass-through taxation of a partnership or sole proprietorship

• double taxation

• only corporate taxation

• only partnership taxation

Net Income is Gross Profit minus all ______.

• Expenses

• Revenues

• Liabilities

• Assets