Income Statement quiz level 1 Financial Accounting Quiz On Apr 1, 2026 Share Follow the Facebook page Accountants Quiz and join the group Accounting QuizIncome Statement quiz level 1 Income Statement quiz level 2 Income Statement level 1 Pass Score 70% The questions change when you repeat the exam 1 / 25 Administrative expenses include : Sales discounts Office salaries Advertising Freight out They relate to general business management. 2 / 25 Gross margin is : Gross profit ÷ Revenue Revenue ÷ COGS Net income ÷ Assets Expenses ÷ Revenue It measures production efficiency. 3 / 25 The income statement covers: A future period Only one day A period of time A specific point in time It summarizes performance over a month, quarter, or year. 4 / 25 Earnings before tax (EBT) equals : Net income + tax Gross profit − tax Operating income − interest Revenue − expenses 5 / 25 Depreciation is classified as : Cash expense Revenue Asset Operating expense 6 / 25 Operating income is calculated as: Revenue − tax Gross profit − operating expenses Net income − tax Revenue − COGS It shows profit from core operations. 7 / 25 Income tax expense appears : In assets Before revenue Before operating income After operating income It’s deducted near the end. 8 / 25 A multi-step income statement shows : Assets and liabilities Cash movements Only net income Detailed profit stages It separates gross and operating income. 9 / 25 Revenue represents : Owner’s capital Money invested Money spent Income earned from operations Revenue comes from selling goods or services. 10 / 25 Income statements are prepared using : Cash basis only Market values Accrual accounting Future values Revenues and expenses are matched to periods. 11 / 25 An increase in depreciation will : Increase net income Increase cash flow Decrease net income Increase revenue It’s an expense. 12 / 25 Interest expense is: COGS Administrative expense Other expense Operating expense 13 / 25 Which item is non-operating ? Sales revenue Interest income Office rent Salaries 14 / 25 Freight-out is : Other expense Selling expense Administrative expense COGS 15 / 25 Which is NOT an operating expense? Interest expense Utilities Rent Salaries Interest is a non-operating expense. 16 / 25 Selling expenses include: Inventory Factory rent Raw materials Sales commissions Selling expenses support sales activity. 17 / 25 What is the main purpose of an income statement? Show cash flows Show assets only Show financial position Measure profitability It reports revenues, expenses, and profit over a period. 18 / 25 Gross profit equals : Revenue − COGS Revenue − Expenses Net income + tax Operating income − tax Gross profit shows profit after production costs. 19 / 25 Cost of Goods Sold (COGS) includes : Advertising costs Office rent Direct production costs Interest expense COGS relates directly to producing goods sold. 20 / 25 Matching principle means : Matching assets with liabilities Matching cash inflows with outflows Matching revenues with expenses Matching equity with profit 21 / 25 Net income is : Gross profit Revenue Profit after all expenses Operating income It’s the “bottom line.” 22 / 25 Which comes first on the income statement? Revenue Expenses Net income Tax Revenue is listed at the top. 23 / 25 net loss occurs when : Assets > Liabilities Revenue > Expenses Cash < Expenses Expenses > Revenue Loss means expenses exceed revenue. 24 / 25 A single-step income statement : Lists all revenues and expenses together Separates operating and non-operating Is only for large firms Uses multiple sections It’s simpler and shorter. 25 / 25 Which affects net income but not cash? Sales Wages Depreciation Rent Your score is LinkedIn Facebook Twitter VKontakte 0% Send feedback income statementIncome Statement quizIncome Statement quiz level 1
