Financial Statements QuizIncome Statement quiz level 1 02/06/2026 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 Which affects net income but not cash? Depreciation Sales Wages Rent 2 / 25 Other income includes : Wages Sales revenue COGS Rent earned It comes from non-core activities. 3 / 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. 4 / 25 Which item is non-operating ? Sales revenue Salaries Interest income Office rent 5 / 25 Operating income is calculated as: Revenue − tax Gross profit − operating expenses Net income − tax Revenue − COGS It shows profit from core operations. 6 / 25 Which is NOT an operating expense? Salaries Rent Interest expense Utilities Interest is a non-operating expense. 7 / 25 Which comes first on the income statement? Revenue Tax Net income Expenses Revenue is listed at the top. 8 / 25 net loss occurs when : Expenses > Revenue Cash < Expenses Revenue > Expenses Assets > Liabilities Loss means expenses exceed revenue. 9 / 25 Selling expenses include: Factory rent Raw materials Sales commissions Inventory Selling expenses support sales activity. 10 / 25 The income statement covers: A period of time A specific point in time Only one day A future period It summarizes performance over a month, quarter, or year. 11 / 25 Gross profit equals : Operating income − tax Net income + tax Revenue − COGS Revenue − Expenses Gross profit shows profit after production costs. 12 / 25 Depreciation is classified as : Cash expense Operating expense Asset Revenue 13 / 25 Freight-out is : Other expense COGS Administrative expense Selling expense 14 / 25 The bottom line refers to : Net income Gross profit Revenue Operating income It’s the final profit figure. 15 / 25 A multi-step income statement shows : Only net income Cash movements Detailed profit stages Assets and liabilities It separates gross and operating income. 16 / 25 Income statements are prepared using : Cash basis only Market values Future values Accrual accounting Revenues and expenses are matched to periods. 17 / 25 A single-step income statement : Separates operating and non-operating Uses multiple sections Is only for large firms Lists all revenues and expenses together It’s simpler and shorter. 18 / 25 Gross margin is : Net income ÷ Assets Gross profit ÷ Revenue Expenses ÷ Revenue Revenue ÷ COGS It measures production efficiency. 19 / 25 An increase in depreciation will : Increase net income Decrease net income Increase cash flow Increase revenue It’s an expense. 20 / 25 Earnings before tax (EBT) equals : Gross profit − tax Net income + tax Revenue − expenses Operating income − interest 21 / 25 Revenue represents : Income earned from operations Money invested Owner’s capital Money spent Revenue comes from selling goods or services. 22 / 25 Net income is : Gross profit Revenue Profit after all expenses Operating income It’s the “bottom line.” 23 / 25 Administrative expenses include : Freight out Advertising Office salaries Sales discounts They relate to general business management. 24 / 25 Matching principle means : Matching assets with liabilities Matching revenues with expenses Matching equity with profit Matching cash inflows with outflows 25 / 25 Income tax expense appears : Before operating income After operating income Before revenue In assets 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
