Income Statement Quiz

Income Statement Quiz:

Please note that all fields followed by an asterisk must be filled in.

1. Which statement is the first component of the financial statements?*

	a) Balance Sheet
	b) Cash flow statement
	c) Income Statement
	d) Statement of Changes in Equity
	e) None of the above

2. The income statement is also known as the __________?*

	a) Profit and Loss Statement
	b) Statement of Basic Income
	c) Net Income and Expense Statement
	d) Cash Flow Statement
	e) None of the above

3. The income statement's primary purpose is to show the __________ of a business.*

	a) financial position
	b) financial performance
	c) cash position
	d) expenses
	e) None of the above

4. The income statement is drawn up from the figures in the __________.*

	a) Debtors ledger
	b) Creditors Ledger
	c) Cash Flow Statement
	d) Trial Balance
	e) None of the above.

5. Which of the following statements are true?*

	a) An income statement usually covers a full year.
	b) The income statement may be drawn up for shorter periods, such as one month or three months.
	c) These shorter periods are used by managers to make internal business decisions.
	d) The period of time that is covered by the income statement (and other financial statements) is called the accounting period.
	e) All of the above.

6. A business has $250,000 income and $60,000 expenses. What is the net profit?*

	a) $310,000
	b) $250,000
	c) $160,000
	d) $190,000
	e) None of the above.

Questions 7-10 below relate to the income statement for a trading business.

7. Which of the following statements are true?*

	a) The first section of the income statement for a trading business shows the buying and selling of goods.
	b) The first section of the income statement for a trading business shows net profit.
	c) The first section of the income statement for a trading business shows the tax expense.
	d) None of the above.

8. Which of the following statements are true?*

	a) Cost of goods sold is also known as cost of sales.
	b) Cost of goods sold is the direct costs of the inventory that we have sold during the year.
	c) Cost of goods sold is an expense charged against sales to work out a gross profit.
	d) None of the above.
	e) All of the above.

XYZ Inc. had the following figures in its income statement:

Sales $920,000
Cost of Goods Sold $320,000
Gross Profit ________
Other Income $50,000
Salaries $220,000
Advertising $100,000
Rent $80,000
Other Expenses $50,000
Net Profit _________

9. The gross profit figure is:*