Components of an income statement:

• Sales revenue is calculated as total units sold multiplied by the price per unit.


  True
• Revenue is the first line item on an income statement.


  True
• Gross profit is earned after deducting COGS from sales revenue
• Match the terms with their definitions:

  Gross Profit ↔️ Profit after deducting COGS

  COGS ↔️ Direct costs of producing goods
• Operating expenses reduce gross profit to calculate net profit
• Operating Expenses are directly related to the production of goods or services.

  False
• The Income Statement summarizes a business's financial performance over a specific period.

  True
• What is Gross Profit calculated as in an Income Statement?

  Sales Revenue - COGS
• COGS represents the direct costs associated with producing goods or services
• Gross Profit is calculated by subtracting COGS from Revenue
• Increased sales prices have a positive effect on Gross Profit.

  True
• Salaries and wages are examples of Operating Expenses.


  True
• Operating Profit reflects a company's profitability from its core business activities.


  True
• Interest Expenses reduce Net Profit.


  True
• Net Profit represents the final profit figure after all expenses and taxes are deducted.


  True
• Net Profit is significant for business decisions and investor evaluations.

  True
• Gross Profit on an Income Statement is calculated as Sales Revenue - COGS
• Match the income statement component with its description:

  Sales Revenue ↔️ Total income generated from sales

  Cost of Goods Sold (COGS) ↔️ Direct costs of producing goods

  Gross Profit ↔️ Profit after deducting COGS

  Net Profit ↔️ Profit after deducting all expenses
• Gross profit is calculated by subtracting COGS from Sales
• Steps to calculate gross profit

  1️⃣ Calculate total revenue

  2️⃣ Calculate cost of goods sold

  3️⃣ Subtract COGS from revenue

  4️⃣ Result is gross profit
• Lower COGS can increase gross profit.

  True
• What are interest expenses?

  Costs for borrowing money
• Why is profit before tax a significant metric?

  Excludes taxation impact
• What is the formula for calculating Profit Before Tax (PBT)?

  $Gross Profit - Operating Expenses - Interest Expenses$
• PBT facilitates better comparisons and decision-making by showing core profitability without tax considerations.


  True
• Taxes are calculated as a percentage of Profit Before Tax (PBT).


  True
• Net Profit is calculated by subtracting taxes from PBT
• What do Operating Expenses include?

  Salaries, rent, utilities
• Net Profit is calculated by subtracting taxes from PBT.

  True
• Gross profit is calculated as sales revenue minus the cost of sales
• Cost of Goods Sold (COGS) represents the direct costs associated with producing goods
• What is the formula for calculating revenue?

  Total units sold x Price per unit
• Gross profit is calculated as revenue minus COGS.


  True
• What is Net Profit calculated from in a business?

  Gross Profit - Operating Expenses
• What is Operating Profit calculated as?

  Gross Profit - Operating Expenses
• How is Sales Revenue calculated in an Income Statement?

  Total units sold x Price per unit
• Net Profit is calculated by subtracting all expenses from Gross Profit.


  True
• What is the formula for calculating COGS?

  Beginning Inventory + Purchases - Ending Inventory
• What is the impact of operating expenses on Net Profit?

  Reduces Net Profit
• If a company has revenue of $200,000 and COGS of $80,000, the Gross Profit is $120,000