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