Financial Statements QuizIncome Statement quiz level 1 02/07/2026 1 min read 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 A multi-step income statement shows : Detailed profit stages Assets and liabilities Only net income Cash movements It separates gross and operating income. 2 / 25 Which is NOT an operating expense? Utilities Interest expense Rent Salaries Interest is a non-operating expense. 3 / 25 Administrative expenses include : Sales discounts Advertising Freight out Office salaries They relate to general business management. 4 / 25 Net income is : Revenue Operating income Gross profit Profit after all expenses It’s the “bottom line.” 5 / 25 Selling expenses include: Raw materials Inventory Factory rent Sales commissions Selling expenses support sales activity. 6 / 25 What is the main purpose of an income statement? Show assets only Measure profitability Show financial position Show cash flows It reports revenues, expenses, and profit over a period. 7 / 25 Revenue represents : Owner’s capital Money spent Income earned from operations Money invested Revenue comes from selling goods or services. 8 / 25 Gross profit equals : Revenue − COGS Operating income − tax Revenue − Expenses Net income + tax Gross profit shows profit after production costs. 9 / 25 Freight-out is : COGS Administrative expense Selling expense Other expense 10 / 25 The income statement covers: A period of time A future period A specific point in time Only one day It summarizes performance over a month, quarter, or year. 11 / 25 Income statements are prepared using : Future values Market values Cash basis only Accrual accounting Revenues and expenses are matched to periods. 12 / 25 Gross margin is : Expenses ÷ Revenue Gross profit ÷ Revenue Revenue ÷ COGS Net income ÷ Assets It measures production efficiency. 13 / 25 Depreciation is classified as : Revenue Cash expense Operating expense Asset 14 / 25 Cost of Goods Sold (COGS) includes : Office rent Advertising costs Direct production costs Interest expense COGS relates directly to producing goods sold. 15 / 25 net loss occurs when : Expenses > Revenue Revenue > Expenses Assets > Liabilities Cash < Expenses Loss means expenses exceed revenue. 16 / 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. 17 / 25 An increase in depreciation will : Increase net income Increase revenue Decrease net income Increase cash flow It’s an expense. 18 / 25 Operating income is calculated as: Revenue − tax Revenue − COGS Net income − tax Gross profit − operating expenses It shows profit from core operations. 19 / 25 Interest expense is: COGS Operating expense Other expense Administrative expense 20 / 25 Which comes first on the income statement? Expenses Net income Tax Revenue Revenue is listed at the top. 21 / 25 Earnings before tax (EBT) equals : Operating income − interest Net income + tax Revenue − expenses Gross profit − tax 22 / 25 Other income includes : COGS Rent earned Sales revenue Wages It comes from non-core activities. 23 / 25 The bottom line refers to : Revenue Net income Gross profit Operating income It’s the final profit figure. 24 / 25 Which item is non-operating ? Sales revenue Interest income Office rent Salaries 25 / 25 Income tax expense appears : After operating income In assets Before revenue Before operating income It’s deducted near the end. Your score is LinkedIn Facebook Twitter VKontakte 0% Send feedback 🚀 Join Telegram Group 📢 Telegram Channel 📘 Facebook Group 👍 Facebook Page 📌 Pinterest
