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