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