41
The income statement is also known as:
A.
B.
C.
D.
Answer & Solution
The income statement is commonly referred to as the profit and loss statement (P&L) because it reports a company's revenues and expenses over a period.
42
The primary purpose of an income statement is to show:
A.
B.
C.
D.
Answer & Solution
The income statement reports revenues, expenses, and net profit or loss over a specific period.
43
Which of the following appears at the top of an income statement?
A.
B.
C.
D.
Answer & Solution
Revenue (or sales) is recorded at the top of the income statement, followed by expenses and net profit or loss.
44
The formula for net income is:
A.
B.
C.
D.
Answer & Solution
Net income is calculated by subtracting total expenses from total revenues.
45
Gross profit is calculated as:
A.
B.
C.
D.
Answer & Solution
Gross Profit is the difference between total sales revenue and the Cost of Goods Sold (COGS).
46
Operating income is derived after deducting which type of expenses?
A.
B.
C.
D.
Answer & Solution
Operating income is revenue minus cost of goods sold and operating expenses (like selling, general, and administrative expenses).
47
Which of the following is NOT an operating expense?
A.
B.
C.
D.
Answer & Solution
Interest expense is a financing cost, not an operating expense.
48
Which of the following statements is correct regarding revenue?
A.
B.
C.
D.
Answer & Solution
Under accrual accounting, revenue is recorded when it is earned, not when cash is received.
49
If total revenue is $50,000 and total expenses are $30,000, the net income is:
A.
B.
C.
D.
Answer & Solution
Net Income = Revenue – Expenses → $50,000 – $30,000 = $20,000.
50
Which of the following would be classified as other income in an income statement?
A.
B.
C.
D.
Answer & Solution
Other income includes non-operating revenue like interest income and investment gains.
