Income Statement: 5 Practice Questions

Here are 5 quick questions on the Income Statement. Can you get them all right?

1. The Income Statement provides a summary of a business's Revenues and Expenses. True or False?
2. The Income Statement is also known as the Statement of Cash Flows. True or False?
3. We can calculate Gross Profit by deducting Cost of Sales from Revenue. True or False?
4. "Dividends Paid" is recorded as an Operating Expense on the Income Statement. True or False?
5. Net Profit can be found on the bottom line of the Income Statement. True or False?

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[AccountingStuff]

How many did you get right?

ANSWERS ⬇️

1. TRUE - The Income Statement provides a summary of a business’s Revenues and Expenses over a period of time.
2. FALSE - The Income Statement is also known as the Statement of Profit & Loss.
3. TRUE - Gross Profit is calculated by deducting Cost of Sales from Revenue.
4. FALSE - "Dividends Paid" is not recorded as an Operating Expense on the Income Statement. Dividends are distributions of earnings to a business’s owners and are recorded in the Equity section of the Balance Sheet.
5. TRUE - Net Profit can be found on the bottom line of the Income Statement.

Head to accountingstuff.com for more practice questions like this.

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[carolynniemann]

These micro quizzes are so helpful. Keep em coming please! Lol Thank you. 😎🤟

[blackfromdawestside]

5/5. Looking forward to the next one. Thanks!

[hoorfasihat]

This kind of quizzes is very helpful and also not boring but it's fun to do it

[nicholas]

5/5 . These are great, only recommendation is for the false answers give a brief explanation how to make it true.

[antoniooliver]

4/5. Accounting major here, am I ready for the CPA lol 😂

[a.eaccountingtutorials]

5/5 ✅ . By A.E ACCOUNTING TUTORIALS ON YOUTUBE 📚✅

[jimjames]

Dividends paid is an equity account yes?

[CullumEnnis]

5 but you need to be a bit more in depth in terms of your bottom line. It depends on the business as that net profit after tax may be distributed instead of retained

[ismaelpena]

4/5 I recently graduated with my Accounting degree. Trying to remember everything hahaha 🤣😂.

[IlIlIllllllI]

4/5 i kinda got confused on the last question ughhh