Profit and lose statement

Question 1

The income statement summarizes

Answer 1

a company’s revenue and other income, expenses, losses,
and bottom-line profit or loss for a period.

top billing over the
other two primary financial statements (the balance sheet and the statement of cash flows),

referred to informally as the
Profit & Loss or P&L statement, although these titles are seldom used in external financial

Question 2

Financial reporting standards demand that

Answer 2

an income statement be presented in quarterly

and annual financial reports to owners

Question 3

Financial reporting standards demand

Answer 3

that an income statement be presented in quarterly

and annual financial reports to owners

Question 4

income statement reporting requires a
company to show the cost of goods
(products) sold as a separate expense

Answer 4

company to show the cost of goods

(products) sold as a separate expense

Question 5

The difference must be reported as gross

margin

Answer 5

gross
margin (or gross profit). Therefore, the
condensed income statement should be
expanded as follows:

Income Statement for Year
Sales revenue $26,000,000
Cost of goods sold 14,300,000
Gross margin $11,700,000
Other expenses 10,010,000
Net income $1,690,000