Gr 12 Math Lit: Ch 1.4 Income, Expenditure, Profit and Loss

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Questions and Answers

What is the primary purpose of an income-and-expenditure statement?

  • To summarize all income received and expenses incurred over a specific period (correct)
  • To display data for two different periods for comparison
  • To estimate expected income and expenses for a future period
  • To outline a yearly plan for spending money to achieve goals

What is a characteristic of a budget?

  • It shows all actual incomes and expenditures
  • It is based on past income-and-expenditure statements and future needs (correct)
  • It provides a summary of actual income and expenses over a given period
  • It displays data for two different periods for comparison

What is the primary purpose of a budget?

  • To provide a summary of actual income and expenses over a given period
  • To identify variances and make adjustments
  • To estimate expected income and expenses for a future period (correct)
  • To display data for two different periods for comparison

What is a characteristic of start-up costs?

<p>One-time expenses like equipment and furniture (D)</p> Signup and view all the answers

What is a purpose of preparing income-and-expenditure statements and budgets for small businesses?

<p>To compare actual income and expenses against the budget to identify variances and make adjustments (C)</p> Signup and view all the answers

What is a characteristic of monthly operating costs?

<p>Recurring expenses such as rent, loan repayments, and utilities (B)</p> Signup and view all the answers

What is a purpose of analysing income-and-expenditure statements and budgets for larger organizations?

<p>To understand and analyse broad categories and trends (A)</p> Signup and view all the answers

What is a key feature of an income-and-expenditure statement?

<p>It provides a summary of actual income and expenses over a given period (D)</p> Signup and view all the answers

What is the break-even point in a business?

<p>The point where income equals total costs (B)</p> Signup and view all the answers

What is the main source of income for a business?

<p>Sales of goods or services (C)</p> Signup and view all the answers

What is the purpose of a budget in a small business?

<p>To estimate expected costs and plan for future expenses (B)</p> Signup and view all the answers

What is the formula to calculate profit?

<p>Total Income - Total Expenditure (D)</p> Signup and view all the answers

What is a loss in a business?

<p>When total expenditure exceeds total income (D)</p> Signup and view all the answers

What is the primary purpose of an income-and-expenditure statement?

<p>To report actual expenditure and income (C)</p> Signup and view all the answers

What is an example of an occasional cost in a business?

<p>Insurance premiums (B)</p> Signup and view all the answers

Why is managing income and expenditure important for a business?

<p>For effective financial planning and resource allocation (D)</p> Signup and view all the answers

What is the main difference between fixed costs and variable costs?

<p>Fixed costs remain the same, while variable costs change with the level of production or sales. (A)</p> Signup and view all the answers

What is the purpose of categorizing expenditure into fixed, variable, and occasional costs?

<p>To identify areas where costs can be reduced or optimized. (D)</p> Signup and view all the answers

What is the result when total income exceeds total expenditure?

<p>A profit is made. (B)</p> Signup and view all the answers

Why is it essential to manage income and expenditure effectively?

<p>To ensure long-term financial sustainability and make informed decisions. (A)</p> Signup and view all the answers

What is the purpose of an income-and-expenditure statement in a small business?

<p>To report actual income and expenditure. (A)</p> Signup and view all the answers

What is a characteristic of production costs?

<p>They include day-to-day expenses incurred in producing goods or services. (D)</p> Signup and view all the answers

What is the formula to calculate a loss in a business?

<p>Loss = Total Expenditure - Total Income. (A)</p> Signup and view all the answers

What is the significance of the break-even point in a business?

<p>It is the point at which the business neither makes a profit nor incurs a loss. (D)</p> Signup and view all the answers

What is the primary difference between an income-and-expenditure statement and a budget?

<p>A budget is a yearly plan, while an income-and-expenditure statement is a summary of actual income and expenses. (D)</p> Signup and view all the answers

Why is it important to divide a budget into key areas of expenditure?

<p>To allocate resources effectively and make informed financial decisions. (D)</p> Signup and view all the answers

What is the purpose of comparing actual income and expenses with the budget?

<p>To identify variances and make adjustments to the business's financial plan. (A)</p> Signup and view all the answers

What is the difference between start-up costs and monthly operating costs?

<p>Start-up costs are one-time expenses, while monthly operating costs are recurring expenses. (B)</p> Signup and view all the answers

What is the purpose of preparing income-and-expenditure statements and budgets for small businesses?

<p>To make informed financial decisions and guide financial planning. (B)</p> Signup and view all the answers

What is the advantage of including deficit spending in a budget?

<p>It allows the business to finance its spending plans, even if it does not have enough money. (C)</p> Signup and view all the answers

Why do income-and-expenditure statements display data for two different periods?

<p>To compare the business's performance over time. (B)</p> Signup and view all the answers

What is the purpose of understanding and analyzing income-and-expenditure statements and budgets for larger organizations?

<p>To understand and analyze broad categories and trends. (C)</p> Signup and view all the answers

What is the primary aim of analyzing income-and-expenditure statements and budgets for small businesses?

<p>To compare actual income and expenses against the budget (D)</p> Signup and view all the answers

How do income-and-expenditure statements typically display financial values?

<p>In thousands, but representing millions (C)</p> Signup and view all the answers

What is a key feature of deficit spending in a budget?

<p>It needs to be financed by loans (B)</p> Signup and view all the answers

What is the primary purpose of dividing a budget into key areas of expenditure?

<p>To guide financial decisions and allocate resources effectively (B)</p> Signup and view all the answers

What is the primary advantage of preparing income-and-expenditure statements and budgets for small businesses?

<p>It provides a clear picture of financial performance and guides financial decisions (D)</p> Signup and view all the answers

What is the primary purpose of comparing actual income and expenses with the budget?

<p>To make adjustments and ensure that spending aligns with income (A)</p> Signup and view all the answers

What is a characteristic of income-and-expenditure statements in larger organizations?

<p>They focus on broad categories and trends, rather than detailed expenses (B)</p> Signup and view all the answers

What is a key difference between an income-and-expenditure statement and a budget?

<p>An income-and-expenditure statement summarizes actual income and expenses, while a budget estimates expected income and expenses (B)</p> Signup and view all the answers

Which of the following statements is true about the calculation of profit and loss?

<p>Profit is calculated as the total income minus the total expenditure, and loss is calculated as the total income plus the total expenditure. (A)</p> Signup and view all the answers

What is the primary purpose of categorizing expenditure into fixed, variable, and occasional costs?

<p>To allocate resources efficiently and make informed financial decisions. (B)</p> Signup and view all the answers

What is the result when total expenditure exceeds total income?

<p>The business incurs a loss. (D)</p> Signup and view all the answers

Why is it essential to manage income and expenditure effectively in a business?

<p>To ensure the long-term success and financial sustainability of a business. (C)</p> Signup and view all the answers

What is the main difference between an income-and-expenditure statement and a budget?

<p>A budget estimates expected costs, while an income-and-expenditure statement reports actual expenditure and income. (D)</p> Signup and view all the answers

What is the primary purpose of financial planning in a business?

<p>To ensure the long-term success and financial sustainability of a business. (B)</p> Signup and view all the answers

What is the significance of the break-even point in a business?

<p>It is the point at which the business neither makes a profit nor incurs a loss. (B)</p> Signup and view all the answers

Why is it important to analyze income-and-expenditure statements and budgets for small businesses?

<p>To make informed financial decisions and ensure the long-term success of a business. (D)</p> Signup and view all the answers

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