Lesson 5: Profit and Loss

Question 1

the net sales of goods is more than the costs spent in the business

Answer 1

profit

Question 2

the net sales of goods is less than the cost spent.

Answer 2

loss

Question 3

the net sales of goods is equal to the cost that was incurred in business

Answer 3

break-even

Question 4

It is the amount collected from the sale
of goods after deductions such as discounts or refunds are made.

Answer 4

net sales

Question 5

refer to the amount paid for raw materials or ingredients
needed to produce a product or a cost of a product intended for resale.

Answer 5

variable costs

Question 6

expenses that you might incur in operating your business like rent for your
space, salary of your worker, insurance fees, interest payments for a loan, office
and store supplies and etc.

Answer 6

fixed costs

Question 7

steps for profit ad loss

Answer 7

identity and label all info; compute selling price; compute net sales; identify variable cost; identify fixed cost; compute profit/loss using simple income statement

Question 8

This is the cost of expenses that does not vary over time on a certain relevant range, the number of products sold, and production of goods to be sold.

Answer 8

fixed cost (FC)

Question 9

This may also include
payment for lease and rental, salaries of workers, insurance,
and interests.

Answer 9

fixed cost (FC)

Question 10

This may refer to the amount of money spent for raw
materials used in the production of the goods including the
labor, utility expenses, and commissions.

Answer 10

variable cost (VC)

Question 11

This means that
this cost varies depending on the number of units of goods
produced

Answer 11

variable cost (VC)

Question 12

This is the sum of the fixed cost and variable cost.

Answer 12

total cost (TC)

Question 13

This is the price of the product being sold.

Answer 13

selling price (SP)

Question 14

the process used to determine the number of units of
products to sell in order to cover the costs.

Answer 14

break-even analysis

Question 15

It is necessary for
business owners to determine the quantity of products to sell
for them to avoid loss.

Answer 15

break-even analysis

Question 16

s the number of units of goods or products needed to be sold
in order to cover the all the costs.

Answer 16

break-even point

Question 17

break-even point formula

Answer 17

BEP = fixed cost / selling price per unit - variable cost per unit

Question 18

steps to solve for break-even point

Answer 18

identify total fixed cost; identify variable cost per unit; identify selling price; use formula; check your answer; make your conclusion

Question 19

basic profit and loss computation

Answer 19

profit = total revenue - total expenses

Question 20

total revenue includes

Answer 20

sales revenue, other income

Question 21

total expenses include

Answer 21

cost of goods, operating expenses, non-operating expenses, depreciation and amortization

Question 22

if the net sales exceed the break even point,

Answer 22

it generates a profit

Question 23

if the net sales are below the break even point

Answer 23

it incurs a loss