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