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