Week 2: Income Statement

Question 1

Income Statement Equation

Answer 1

Net Income (or earnings) = revenue - expenses

Question 2

Single-step income statement

Answer 2

List and add together all revenues to get total revenues

List and add together all expenses to get total expenses

Then Subtract total revenues from total expenses to get net income

Question 3

Multi-Step Income Statement

Answer 3

Sales

COGS

Gross Profit

Operating expenses

Operating Income (EBIT)

Interest Expense
Depreciation expense

EBT
Income Taxes

Net Income

Question 4

Sales

Answer 4

Revenue

Units x Price

Question 5

COGS

Answer 5

Cost of Goods Sold

Question 6

Gross Profit equation

Answer 6

Sales - COGS

Question 7

EBT

Answer 7

Earnings before taxes

Question 8

EBIT equation

Answer 8

Earnings before Interest and taxes

(Operating income)

= Gross profit - operating expenses

Question 9

Net income equation

Answer 9

= Revenue - expenses

Question 10

Operating Expense

Answer 10

An expense a business incurs through its normal business operations