Components of an income statement:

    Cards (86)

    • 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)?
      GrossProfitOperatingExpensesInterestExpensesGross 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