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Small Business Development
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How to Prepare an Income Statement
Name
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First
Last
Email
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1. What is the first thing that goes on every income statement?
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Cost of Goods Sold
Wages Payable
Wages Expense
Sales Revenue
2. Sales Revenue is what you earn from making sales through product and services.
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True
False
3. _____ is the profit you have before you deduct additional expenses.
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Gross Profit
Cost of Goods Sold
Investment Profit
None of the Above
4. The biggest expense on an income statement will be either the Cost of Goods Sold or the Cost of Services Sold.
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True
False
5. Gross Profit minus Total Operating Expense equals _____.
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Non-Operating Income
Cost of Goods Sold
Operating Income
None of the above
6. How does one calculate “Income Before Income Taxes”?
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Operating Expense minus Wages Expense
Operating Income minus Interest Expense
Operating Income plus Wages Expense
Operating Income plus Interest Expense
7. Income Before Income Taxes minus Income Tax Expense equals Net Income.
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True
False
8. Operating Expenses are the expenses related to the daily operations of a business.
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True
False
9. When creating an income statement your Debit and Credit Totals will never equal.
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False
True
10. Income Before Income Taxes _____ by the Tax Rate equals Income Tax Expense.
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Subtracted
Divided
Multiplied
None of the Above